Home buyers’ sentiments remain positive despite latest cooling measures
The residential market ran full steam ahead in 2021 in spite of the pandemic, with prices escalating in the second half of 2021. URA real estate statistics of 4Q2021 show private home prices shooting up 10.6%, outstripping the overall 2.2% increase for residential properties as a whole.
The transaction volume of private homes also went up significantly. Developers sold 13,027 private residential units in 2021, compared to 9,982 units in 2020. There were also 19,962 resales and 568 sub-sales in 2021, respectively higher than the 10,729 resales and 198 sub-sales in 2020.
The HDB resale market was equally buoyant last year. The Resale Price Index registered a 12.7% increase for the whole of 2021, the highest annual increase since the 14.1% growth in 2010. A total of 31,017 HDB flats changed hands, 25.3% higher than in 2020. A record number of million-dollar HDB-flat transactions were also inked in 2021.
Due to concerns over the surge in home sales and prices running ahead of economic fundamentals, the government implemented a set of measures to cool the private and public housing markets. Taking effect from 16 Dec 2021, Additional Buyer’s Stamp Duty (ABSD) was raised by 5% to 10%, and the Total Debt Servicing Ratio (TDSR) was lowered from 60% to 55% to prevent households from becoming overleveraged. The government also tightened the Loan-to-Value (LTV) limit for HDB loans from 90% to 85%, while increasing public and private housing supply to cater to demand.
With the cooling measures, how will the buying sentiments be impacted?
According to the Property Ownership Aspirations Survey* jointly conducted by EdgeProp Singapore and NUS Institute of Real Estate and Urban Studies (NUS IREUS), close to half the respondents surveyed would purchase a property in 2022.
The Property Ownership Aspirations Survey 2021/2022 was conducted over the onemonth period from the last week of December 2021 to the last week of January 2022, in order to accurately capture the respondents’ reactions to the cooling measures. A total of 1,148 responses from a good mix of respondents across different age groups and economic profiles were collected.
Sentiments softened in 2021/2022 compared to a year ago when a similar survey conducted in 2020/2021 showed that 53.2% of the respondents were then seeking to purchase a home in 2021. The latest round of cooling measures had apparently triggered a 4 percentage point drop.
In contrast, following the July 2018 cooling measures, respondents seeking new homes in 2019 were markedly lower (43.1%), down 12.5 percentage points from 55.6% the previous year.
That does not mean the 2021 cooling measures were not effective: Close to half the respondents who had no intention of buying a property in the next 12 months, said they would have been on the hunt if not for the property cooling measures. They made up about 25% of the respondents.
This means that, if not for the cooling measures, about 74% of all the respondents would have sought to purchase a new resi