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\nProperty affordability sentiment in Singapore remains low, especially among younger buyers.\u00a0\u00a0
\nRecent news\u00a0reports have indicated\u00a0that private property prices in Singapore are expected to rise this year, raising fears that some buyers including young couples may\u00a0find it harder to buy a new house.\u00a0However, experts insist\u00a0there are still good deals in the market.\u00a0
\nBy Romesh Navaratnarajah
\nSingaporean\u00a0Navin Kumar (not his real name) got married about two years ago, and while it should have been a happy time for the 33-year-old trader, he faced several\u00a0challenges finding a suitable\u00a0marital home. The biggest issue was \u201cfinding affordable housing that is in line with the pay-scale of normal working Singaporeans\u201d, he\u00a0told PropertyGuru.\u00a0
\nThe issue was compounded by the fact that his wife was a permanent resident, making it trickier when it came to making property decisions as the regulations are different\u00a0than for\u00a0regular Singaporean couples.\u00a0
\n\u201cPrivate property prices in Singapore may have come down (from their last peak in 2013), but in general it is still expensive for the general population,\u201d said Kumar, who turned to renting a small unit in the\u00a0Tanjong Katong area in the hope that prices would drop further in the future.\u00a0
\n\u201cIt makes more sense to rent now unless one has the cash reserves to put down on a house. With that kind of money, one could buy something larger and with more value overseas, so I don\u2019t feel it makes sense to spend too much money on property in Singapore.\u201d\u00a0
\nWhile he does agree that owning a home is important, his worry is that having too much\u00a0mortgage debt under the current global economic climate is\u00a0risky,\u00a0especially given his view that Singapore is going\u00a0through a transition phase in its economy.\u00a0
\nSingapore properties more affordable than in Malaysia?\u00a0
\nAlthough his\u00a0concerns are understandable, property experts shared that housing prices in Singapore are still relatively affordable.\u00a0\u00a0
\n\u201cIn fact, Singapore\u2019s housing affordability level is even better than that of Malaysia,\u201d said Alan Cheong, Research Head at Savills Singapore. He\u00a0cited data from US-based urban development research company Demographia, which revealed that Malaysia\u2019s house prices are more than 5.5 times the median income compared to Singapore\u2019s 5.1 times.\u00a0
\n\u201cIf we use the affordability index computed by Numbeo\u00a0(a cost of living comparison website),\u00a0Singapore ranks at No. 72 on the list of least affordable cities,\u201d he added. By comparison, Hong\u00a0Kong is ranked No. 17 while\u00a0Beijing is No.3 on the list.\u00a0
\nThat\u2019s of little comfort to Kumar who noted that affordability is subjective. \u201cWhat one finds affordable may not be the opinion shared by others,\u201d he said.\u00a0
\nHis concerns are shared by many Singaporeans, with recent\u00a0findings from\u00a0PropertyGuru\u2019s Consumer Sentiment Survey showing that property affordability sentiment here remains low.
\nThe issue of affordability may get worse in 2018 with PropertyGuru\u2019s Property Market Outlook report predicting that new launch prices could be at least 5.0 percent higher than\u00a0last year.
\nAreas most at risk of a price increase include districts 10, 9 and 15 because of their proximity to established schools and the Central Business District.\u00a0
\nAs such, the report encouraged buyers who have been waiting on the sidelines to purchase a home as soon as possible\u00a0if they find something suitable.\u00a0\u00a0
\nStill,\u00a0Cheong\u00a0has a more optimistic view\u00a0that\u00a0if\u00a0one diligently looks for a property based on the person\u2019s set criteria, there will always be good deals.
\n\u201cThere are always good deals because the property market is imperfect,\u201d he said. \u201cIt is imperfect because of the relative slowness of information flow and the heterogeneity of physical properties (no two properties are the same, even if they are in the same condominium or housing estate).\u201d
\nHe added that the government\u2019s concern about social and income inequality will mean that Singapore\u2019s housing market should remain affordable for the foreseeable future.\u00a0
\n\u201cIn all likelihood, they should be benchmarking\u00a0price increases with household income increases in the long term. Thus, young couples should not be afraid that they have or will miss the boat to buy homes, both public and private.\u201d\u00a0
\nSome couples prefer to rent first as they see it as a more affordable option.
\nSpot the opportunities\u00a0
\nIsmail Gafoor, CEO of PropNex Realty, admitted\u00a0that 2017 was\u00a0a good time\u00a0for buyers looking to purchase\u00a0private property due to lower entry prices, but he noted that there are still opportunities in the market.
\nEugene Lim, Key Executive Officer of ERA Realty, agrees. \u201cPrices have just started to recover, and so potential buyers will find that prices have not gone up by a lot yet. Any price increase is expected to be moderate in view of the cooling measures still in place,\u201d he said.\u00a0
\nFor instance, buying an executive condominium (EC) unit would be a good option for young couples as they would be able to enjoy lifestyle amenities with a smaller capital outlay,\u00a0said Ismail.\u00a0
\nThe next EC\u00a0project\u00a0to hit the market\u00a0is Rivercove Residences at Anchorvale in Sengkang, which is expected to launch in Q1 2018. This is\u00a0likely to be the only EC\u00a0to launch in 2018.\u00a0
\nBuyers who do not meet the eligibility requirements to buy ECs can consider the resale condominium market, \u201cwhere they can purchase units at affordable entry prices, much lower than that of new launches\u201d, Ismail said.\u00a0
\n\u201cResale properties are good buys as they are to some extent under-priced today. Buyers should take this opportunity to make a move in their purchase before prices start to increase later this year.\u201d
\nCheong added\u00a0that resale condos are suitable for buyers\u00a0looking at owner-occupation\u00a0as they are usually larger and come with relatively lower per square foot prices.\u00a0
\nFor those who prefer to purchase directly from developers, Ismail\u00a0pointed to\u00a0balance units from previously launched projects still available in the market\u00a0as well as new launches in 2018 such as The Tapestry at Tampines Avenue 10 and Twin Vew at West Coast Vale.\u00a0
\nAccording to Lim,\u00a0new homes require less maintenance work and are usually move-in ready, but they also tend to be pricier than surrounding developments as they are new. \u201cUltimately, it boils down to the buyer\u2019s preference,\u201d he said.\u00a0
\nWhile young couples have the option of choosing either an EC or a private condo,\u00a0Lim noted that public housing is often their first choice as it\u2019s the more affordable option and comes with government subsidies.\u00a0\u00a0
\nBut\u00a0Cheong cautioned that HDB resale prices may remain flat or dip for just one or two months. \u201cWith over 3,900 units being taken off the market by\u00a0en\u00a0bloc sales, the weight of money looking for housing will\u00a0start\u00a0exerting pressure on HDB prices to begin rising soon,\u201d he said.\u00a0
\nFor couples who are willing to wait and are not in any urgency to move, Ismail suggests Build-To-Order (BTO) flats, which are about 20 percent cheaper than HDB resale flats.\u00a0
\nDon\u2019t be picky about location\u00a0
\nAnother important consideration for young couples is location as distance to schools and workplaces will also influence property prices.\u00a0
\nIsmail\u00a0reckons\u00a0that\u00a0with the government\u2019s ongoing masterplans in place to rejuvenate various estates\u00a0in Singapore,\u00a0buyers can afford to be flexible in their choices.
\n\u201cWhat\u00a0is important is that young couples should buy within their affordability and choose the estate that would allow them to commute between work and home efficiently,\u201d\u00a0he said.\u00a0\u00a0
\nLim noted that\u00a0non-mature estates such as Punggol and Sengkang\u00a0are popular among young buyers because they are relatively affordable and well-served by amenities.\u00a0
\nHaving said that, some buyers prefer mature estates for the enhanced convenience. In addition,\u00a0HDB resale buyers\u00a0enjoy the Proximity Housing Grant of $20,000, said Lim.\u00a0\u00a0
\nAs for first-time EC purchases, Cheong\u2019s advice to young couples is not to be too picky about the location because most EC units are\u00a0priced significantly below private condos,\u00a0and hence\u00a0after\u00a0the Minimum Occupation Period, there\u00a0should be an increase\u00a0in prices.\u00a0
\n\u201cFor private properties, they may wish to look at older 99-year leasehold properties that could be ripe for collective sales a decade down the road,\u201d\u00a0he added.\u00a0
\nFor now, Kumar doesn\u2019t plan on getting the keys to his first house.\u00a0\u00a0\u00a0
\n\u201cOur parent\u2019s generation found value in investing in property and making Singapore home, but I\u2019m not convinced that is the case today. I\u2019m quite happy renting while weighing my options,\u201d he said.\u00a0<\/p>\n