Consumer Sentiments Report Helping Consumers Navigate Through The Volatile Real Estate Market

iProperty.com, one of Asia’s top property portals, has been conducting the annual Consumer Sentiments Survey (CSS) since 2011. Through this one-of-a-kind survey, iProperty.com has been able to shed light on what consumers think of the real estate market. 

To better understand how the Singapore property market has evolved over the past few years, iProperty.com has collaborated with Ascendant Assets Pte Ltd to analyse the 2013 survey results. The latest figures will be compared against results from past surveys to draw meaningful conclusions. Although 3 years may not be deemed as a statistically long time, some trends were observed to exist. Some of the trends also closely reflect actual market conditions. By marrying the survey results with data from the Singapore property market, it is envisaged that the survey will eventually become a tool that consumers can use to navigate through the volatile real estate market.

Overview of respondents – who are they?

In general, the proportion of male to female respondents over the past 3 years has been fairly consistent with slightly more male than female respondents. In terms of occupation, the make-up was also consistent with (1) executive/managerial positions; (2) professionals and (3) self employed forming the largest three groups for the past 3 years. As for age, more than 94% surveyed were above 26 years old – which is considered to be of “home hunting” age. Putting all these together, it can be concluded that findings from this survey is reflective of the views of consumers who are thinking of buying or selling a property (see Figure 1).

Figure 1: Overview of respondents’ profile

Source: iProperty.com and Ascendant Assets Pte Ltd

Finding 1: Changing consumer sentiments – more consumers are putting off their buying decision

Since 2011, it was observed that the percentage of respondents who did not intend to buy a property within the next 1 year was on the rise.  It is interesting to note that the results for 2013 saw a sizable increase from the year before (see Figure 2). 

Figure 2: Trend of respondents who do not intend to buy a property within the next 1 year 

Source: URA and Ascendant Assets Pte Ltd

Finding 2: Private condominiums are still highly sought after

Based on the survey, it is interesting to note that respondents have consistently favoured private condominiums (over landed properties).  This can be seen as the percentage of respondents who are interested in private condominiums has consistently been above 66% (see Figure 4).  This runs contrary to the general assumption that many Singaporeans aspire to own a landed property.  However a possible reason for this result could be because landed properties are generally pricier and many of the respondents find it out of their budget. 

Figure 4: Types of properties + motivation behind their purchase

Source: iProperty.com and Ascendant Assets Pte Ltd (* the choices for 2013’s survey did not have homeownership.  Hence long-term investment as well as better environment for families, are used as proxy answers)

It is also noteworthy that there is change in consumers’ motivation to enter the residential market. To illustrate, in 2011, about 40% of respondents wanted to buy a property for rental income.  This figure dropped to 37% in 2012 and 24% in 2013.  From this, it can be concluded that investors (who are looking for rental income) are increasingly put off by the numerous cooling measures and are looking at opportunities in other sectors. 

Not surprisingly, when this is compared against actual transaction data, it was observed that the share of residential deals for the past 2 years has been on the decline (see Figure 5).  From 1995 to 2010, residential transactions formed more than 90% of all transactions.  After the cooling measures were introduced in 2011 and 2012, the proportion dropped to 88.56% and 85.73% respectively. 

Figure 5: Proportion of residential, commercial and industrial transaction

Source: URA and Ascendant Assets Pte Ltd

Combining all these information, we can infer the following – most consumers are still interested in private condominiums.  However, due to the onerous investment conditions in the residential market, brought about by the numerous cooling measures, investors who were thinking of buying a residential unit for rental income has dropped. Going forward, this reinforces the earlier point that the residential sector could see a drop in 2013. 

With investors and property buyers leaving the residential sector in pursuit of higher yield in overseas markets and non-residential sectors, we would expect that only genuine home seekers would be left.  Hence, it does not come as a surprise that more respondents saw themselves as Property Owners in 2012 and 2013 (see Figure 6). 

Figure 6: How the respondents see themselves

Source: iProperty.com and Ascendant Assets Pte Ltd

Finding 3: Trends for respondents’ property budget  

From the survey, it can be seen that the consumers with a budget of less than $600,000 formed a sizable portion of the respondents.  From Figure 7, it can be seen that this group made up 46% and 49% in 2011 and 2012 respectively (see Figure 7). 

Figure 7: Total percentage of respondents who had a budget of $600,000 or less 

Source: iProperty.com and Ascendant Assets Pte Ltd

Source: iProperty.com and Ascendant Assets Pte Ltd

Despite the change in sentiments, it is noteworthy that the top two reasons for buying an overseas properties are (1) to take advantage of the favourable exchange rate and (2) migration plans.  It is also interesting that two of the most popular investment destinations for the last 3 years have consistently been (1) Malaysia and (2) Australia. 

Conclusion

For any property transactions to happen there must be willing buyers and sellers.The iProperty’s 2013 CSS has shown that consumers have become more conservative and many are thinking of holding back their buying decisions.  In view that sentiments have cooled, it is questionable how much more property prices will rise.  

For those who are inclined to sell their units soon, they may want to price their units more attractively so as to sell their properties before the property market malaise sets in.  For those who do not wish to sell, it would mean that they must be prepared to hold as the survey results suggest that 2013 is going to be a bumpy ride for the property market.