Around 7 in 10 homebuyers affected by property cooling measures

More investors might turn to commercial properties rather than luxury properties.

About 68% of homebuyers in Singapore are affected by the recent property cooling measures imposed by the government, PropertyGuru’s latest study revealed.

Of the 68%, 60% were impacted by the Additional Buyer’s Stamp Duty (ABSD) rates. In December last year, the government said ABSD rates will remain at 0% for Singapore Citizens (SC) and 5% for Singapore Permanent Residents (SPRs) when they buy their first residential property but raised the ABSD rate to 17% for SCs’ second residential purchase, 25% on their third and subsequent purchases.

Tan Kee Khoon, country manager of PropertyGuru Singapore, warned that the cooling measures could cause more investors to turn to the commercial and industrial property markets where the ABSD and tight Loan-to-Value limits will not apply.

“If this happens, luxury properties and those in the Core Central Region are expected to be the most affected,” said Tan.

Despite this result, 52% agreed with the government’s new property cooling measures enforcement. Amongst those who agreed, 57% said they believed that the new measures would slow down the increase in property prices. 

Meanwhile, amongst those who disagreed with the cooling measures, 68% said the new measures would make it harder for them to afford the property they intend to buy whilst 36% said it would be more challenging for them to sell their properties.

PropertyGuru also said the impact of the latest cooling rules on homebuyers’ aspirations is multifold as some have lowered their budgets and adjusted their expectations, whilst some have adopted a wait-and-see approach. 

Specifically, 40% of Singaporeans said they seek to change their preferred property, 32% said they are not affected by the latest cooling measures, and 50% are considering a less expensive property compared to before, with an average budget decrease of 9.7%. 

Nearly one in four or 24% of Singaporeans shared that they seek to delay their property purchase because of the latest cooling measures.

The study also showed that Singaporean property buyers are likely to remain open to larger homes in suburban districts which are more value-for-money. Specifically, 42% of Singaporeans expect greater demand for larger homes post-pandemic whilst 30% anticipates greater demand for properties outside of the central region. 

As most professionals in the market continue to implement work from home, 35% expect preferences for residing in less crowded areas to increase whilst 33% also disclosed that they want to repurpose parts of their home that better suit the needs of household members.

Even as 90% of Singaporeans agree on the need for retirement villages, only two in five or 40% of Singaporeans are interested in moving into one in the future. 

Of those interested in moving into retirement homes, 71% said they will transfer into a retirement village once they turn 70 years old or older. However, 48% of Singaporeans want to retire in their current residence, with 37% saying they want to live with or near their family.

Other Singaporeans also considered relocation, with 53% saying that retirement is one of their reasons to buy properties overseas. PropertyGuru’s study showed that Australia (25%) is the most attractive location for Singaporeans who want to purchase property in other countries, followed by the UK (15%), and Malaysia (12%).

The findings are in line with a supplementary survey conducted on the back of the latest biannual H1 2022 PropertyGuru Consumer Sentiment Study (CSS), which measures the Singapore property market's current consumer sentiments and expectations.

Five hundred respondents were polled in the supplemental survey conducted from 10 January 2022 to 14 January 2022 to analyse Singaporeans’ response to new property cooling measures that were imposed on 15 December 2021 whilst the CSS polled 860 Singaporeans between 15 November to 26 December 2021.