51% of non-property owners in Singapore express difficulties in first property purchase: PropertyGuru

SINGAPORE: A recent revelation by PropertyGuru, Singapore’s dominant property marketplace boasting an 82% market share, paints a compelling picture of the challenges faced by potential first-time homeowners.

A significant 51% of non-property owners in the city-state have expressed concerns and difficulties in making their first property purchase.

This sentiment is most pronounced among singles, with 55% feeling the pinch, whereas married couples with children are not far behind, with 49% voicing similar challenges.

This data emerges from PropertyGuru’s bi-annual H2 2023 Consumer Sentiment Study (CSS), an initiative that delves into the nuances of consumer sentiments and anticipations pertaining to Singapore’s property market.

The Sentiment Index from the study, which assesses parameters like current real estate satisfaction, housing affordability, interest rates, government efforts perception, and property pricing trends, retained its position from H1 2023, standing firm at 43 points.

In a deeper dive into the metrics, perceptions related to home loan interest rates and the overall real estate climate maintained consistency with the findings of the previous half of 2023.

Adding another layer to this, the study uncovered that while there’s an upward trend in the number of Singaporeans wanting to buy homes, with 64% indicating their intent to purchase, a significant portion still faces hurdles in securing their first property.

A promising statistic within the findings indicates an increase from 38% in H1 2023 to 45% in H2 2023 of Singaporeans planning to buy within the next two years.

When asked about property preferences, New Build-to-Order (BTO) flats, which are HDB flats procured directly from the Housing Development Board, emerged as the top pick at 31%. This was followed by resale HDB flats at 25% and freshly launched non-landed private properties at 15%.

PropertyGuru’s Country Manager for Singapore, Dr. Tan Tee Khoon, sheds light on these trends by pointing out that this spike could potentially be attributed to the government’s efforts in ramping up the supply.

In line with this, it’s estimated that between 2023 and 2025, about 100,000 private homes and HDB BTO flats will be completed.

Dr Tan adds, “the latest HDB housing policy changes and the enhanced supply should assist Singaporeans grappling with housing acquisition challenges.”

Yet, despite these measures, it’s evident that external factors like inflation, rising costs of living, and escalating property prices form a triad of obstacles that deter Singaporeans from achieving their property dreams.

The role of rising mortgage interest rates and sustained inflation cannot be understated.

The data revealed that if inflation continues unabated, over half, or 53% of potential buyers, might defer their property purchases.

Likewise, further spikes in mortgage interest rates might see 59% of non-property owners, especially singles at a significant 67%, postponing their property purchase.

Vice President of PropertyGuru Finance, Paul Wee, however, presents an optimistic perspective.

He suggests a shift in the narrative around mortgage rates, emphasizing the potential for rates to drop in light of the US core inflation rate decline and the stagnation of interest rates in 2023’s second half.

While property cooling measures were introduced, including heightened Additional Buyer’s Stamp Duty (ABSD) rates in April 2023, Singaporeans seem to be adapting.

The percentage deterred by these tax adjustments has reduced from 29% in H1 2023 to 24% in H2 2023.

Furthermore, Dr Tan offers a perspective for investors, indicating that they understand that property taxes and inflation are fleeting challenges.

For multiple residential property owners, the ABSD is seen as a one-time cost which is weighed against long-term benefits like rental income and property value appreciation.