Singapore-based online real estate group iProperty's ninth Asia Property Market Sentiment Report for H1 2016 shows buyers across the region are almost completely focused on purchasing property in Australia for the first time.
The report, one of Asia’s largest consumer property sentiment surveys, questioned over 12,000 prospective buyers across Singapore, Malaysia, Indonesia and Hong Kong.
Most respondents (77 per cent) do not yet own properties overseas, but close to half (49 per cent) say they would consider making an overseas purchase.
Respondents who intend to purchase overseas property are intending to do so within the next six months (79 per cent) and all eyes are on Australia.
For the first time, almost all respondents are only interested in Australian property compared to a mere 26 per cent who expressed interest in H2 2015.
The report suggests key reasons for investment include the perception that Australian property is a good investment (58 per cent); migration or retirement intent (17 per cent) and favourable exchange rates (16 per cent).
However buyers' budgets are lower compared to H2 2015, with a majority looking to spend between S$500,001 and S$800,000 (from 29 per cent in H2 2015 to 53 per cent in H1 2016) or S$800,001 to S$1 million (from 28 per cent in H2 2015 to 52 per cent in H1 2016).
The survey also reveals buyers are expecting price declines, have less concern about affordability and are confident that cooling measures will be removed.
Most respondents expect interest rates to rise, but say that will not affect their decision to purchase. Confidence in property as an asset class remains very high, with many interested in property as an investment.
BUYERS SHOW CONFIDENCE IN SINGAPORE
95 per cent of respondents are confident that Singapore residential properties make good long-term (five years) investments, up from just 18 per cent in 2H 2015.
Meanwhile 59 per cent (up from 14 per cent in H2 2015) are interested in purchasing another property, despite existing restrictions. Most are looking at flats/walk-up apartments (from 18 per cent in H2 2015 to 91 per cent in H1 2016) or private condominiums (from 50 per cent in H2 2015 to 97 per cent in H1 2016).
96 per cent, up from 75 per cent in H2 2015, expect cooling measures to be relaxed within the next 18 months. Industry watchers have recently called for cooling measures to be lifted, in particular the Additional Buyer’s Stamp Duty (ABSD) that applies to Singapore citizens.
Almost all respondents (93 per cent, up from 52 per cent in H2 2015) expect property prices to continue falling in the next six months, especially for resale private condominiums (58 per cent from 33 per cent in H2 2015) and non-landed luxury condominiums (34 per cent, up from 27 per cent in H2 2015).
Since peaking in 2013, private property prices have fallen for nine consecutive quarters; with prices down 8.4 per cent as of Q4 2015. Analysts predict further falls, with rising interest rates and higher vacancy rates.
Price falls since 2014 have been most significant in the Rest of the Central Region (RCR) at 11.6 per cent, followed by the Core Central Region (CCR) at 8.1 per cent. Prices in the Outside Central Region have fallen by 7.5 per cent so far and remained unchanged in Q4 2015.
While almost all (98 per cent) say interest rates will rise, most (81 per cent) stated that rising rates will not affect their decision to purchase property. Close to 75 per cent of respondents have less than ten years left on their mortgage payments, suggesting capacity for property investments.
In addition a large number of respondents say foreign property buyers are not responsible for Singapore’s high property prices (from 48 per cent in H2 2015 to 70 per cent in H1 2016). Nevertheless, more than half of the respondents (51 per cent) feel that the government should maintain restrictions on foreigners.
PENT UP DEMAND
iProperty Group Singapore General Manager and Chief Business Development Officer Sean Tan says today’s property buyers think they can wait for additional price declines, but warns it is very difficult to time the market.
"Clearly pent-up demand is there; our respondents are not bothered by anticipated rate rises, indicating their funding and finance options are strong,” Tan says.
Singapore estate agency CEO and Executive Director of Real Estate Training & Consultancy (RETC) Thomas Tan agrees demand is "pent up".
“Buyers have been fence-sitting in anticipation of further price declines," he says.
"These sentiments are mainly a result of the government’s cooling measures, including the Total Debt Servicing Ratio (TDSR) and the Additional Buyer’s Stamp Duty (ABSD), which have effectively curtailed demand and controlled property prices.
"Regardless, confidence in the long-term prospects of Singapore’s property market remains strong. The key question for buyers is not whether to buy, but when.”
Iskandar Malaysia remains on investors’ radar. Respondents have indicated that additional discounts (94 per cent) and policy changes favouring foreign buyers (83 per cent) will be pull factors in their consideration to purchase.
“Exchange rates (in Iskandar Malaysia) are favourable, along with the relatively strong bilateral ties between Singapore and Malaysia," says Thomas Tan.
"More importantly, there will be enhanced connectivity via the Rapid Transit System (RTS) connecting Singapore and Johor.
"This may attract those who choose to stay in Johor Bahru, but work in Singapore. The upcoming residential supply will likely be absorbed as the industrial sector grows and more students join educational institutes in Iskandar.”
Key findings of the Survey:
· 95% confidence in property as a good long-term investment
· 96% expect cooling measures to be relaxed
· 93% expect property prices to fall further
· 98% says interest rates will rise
· 81% say rising rates will not affect purchase