On 21st Jan 2015, PropertyNet.SG was invited to attend PropertyGuru’s – Property Outlook Report for 2015 at Marriott Hotel and below are the valuable insights gathered.
PropertyGuru predicts further cooling with possible upswing in fourth quarter 2015
- Further price correction and dip in volume expected for both private housing and HDB resale in 2015
- Possible rebound in volume for private non-landed property sector in fourth quarter of 2015
- For the first time, PropertyGuru’s proprietary data is used to predict property market movement
Lewis Ng, Managing Director of PropertyGuru Singapore,
revealed that 3 out of 5 Singaporeans think that local properties are still overpriced.
SINGAPORE, 21 January 2015 – Earlier today, PropertyGuru released its Property Outlook Report for 2015 at an industry forum. PropertyGuru, the leading property portal in Southeast Asia predicts a further cooling with a slight upswing in second half of 2015.
“As part of our brand essence to enhance the property search experience in Singapore’s fast-evolving real estate market, our report aims to give property seekers, developers and agents relevant information that bridges the correlation between supply and demand as well as identify opportunities that lies ahead in 2015,” said Lewis Ng, Managing Director for Singapore, PropertyGuru.
PropertyGuru report revealed that Singaporeans are adopting a more pragmatic approach towards decisions on property transactions. Based on its consumer sentiment survey, 3 out of 5 Singaporeans think that local properties are still overpriced. Despite the high price perception, over 70% of the respondents still wanted to buy a condo, with 43% expressing their intent to purchase a property in the next six months, with key decision factors to include affordability and amenities.
Developers will have to gradually adjust their prices so that their projects are more affordable to a bigger pool of buyers. For mid-sized mass market private homes of 800 – 1,100 square feet in size, the sweet spot price range will typically be between $900,000 and $1.1 million.
Due to constraints imposed by Total Debt Servicing Ratio (TDSR), buyers are opting to move towards smaller living spaces which cater to their immediate housing needs and financial situation. In the Outside Central Region and Core Central Region, there has been a marked increase from 14 to 17 percent and from 53 to 57 percent for condos 800 square feet and less.
The effect of price premium due to proximity to MRT stations is more apparent in the suburbs than in the city centre, homes near the new MRT line – Thomson-East Coast line – are expected to see capital appreciation in the long-term.
Going into 2015, further correction of prices is expected to continue, coupled with drop in volume. Abundant supply coming into the market – both new non-landed private properties as well as BTO – will apply further downward pressure on prices of private condos and HDB resale units. Prices are expected to decrease rather consistently through 2015. Buying activity for private non-landed properties may pick up in Q4, once buyers have determined that prices have sufficiently bottomed out.
Rental Demand
The rental market for 2015 is expected to see slight increase in demand, partly due to a regulation imposed on permanent residents with a time bar period of three years, preventing them from buying resale flats. With reduced attraction to sell off private condos and HDB flats in the near term due to fallen prices, owners preferred to rent them out, injecting additional supply into the rental market. This supply more than offset additional rental demand, pushing rental prices southward.
Proprietary Data
For the first time, PropertyGuru uses its proprietary data – enquiries submitted by users of PropertyGuru.com.sg – to explain the relationship between enquiries and actual sales transactions. Using government data on historical sales transactions of HDB resale market and private non-landed market, PropertyGuru found an especially strong correlation of 0.7509 between Enquiries and Transaction Volume for the latter, with a pattern of time lag between the two. For HDB resale market, an enquiry is converted into a transaction between 3-6 months, whereas it takes 3 months for private non-landed property. In other words, enquiry volume is a leading indicator of transaction volume. With this, we are able to predict the direction of the market movement.
Interestingly, PropertyGuru also applied an Enquiry/Transaction volume ratio on the different HDB estates and districts of Non-landed Private. This ratio is presented visually in the form of a heat map, to indicate the areas with higher demand relative to actual sales transactions made.
To read the full report, please download the eBook at www.PropertyGuru.com.sg.
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