http://www.businesstimes.com.sg/arch...on-home-prices

Published July 13, 2012

Mixed views on direction of home prices

But many of those polled expect more cooling measures

By Felda Chay


PROPERTY prices will continue their upward climb, and the government will roll out more cooling measures - these are the views of many of the 300 respondents to a Credit Suisse survey.

Some 47 per cent of those surveyed in the bank's inaugural proprietary housing survey believe that homes here will cost more within the next year, with almost three in 10 predicting price increases of up to 10 per cent.

Yet many also believe that the opposite is true: 35 per cent of respondents expect prices to fall within the next 12 months.

This shows that "the market has quite a mixed view on the direction of prices", said Credit Suisse research analysts Yvonne Voon and Chok Sing Ping in a report on the survey findings. However, "there is a slightly heavier weight towards the expectations of rising prices within the next 12 months".

What is much clearer in the minds of the public is the likelihood of government intervention, with 6 in 10 predicting that another round of cooling measures will hit the property market. This could happen within a year, say 40 per cent of respondents.

Those who expect property prices to keep rising cite "genuine demand" from buyers, and the ability to afford a home.

Six in 10 respondents say they will consider buying a residential property within three years, with just 31 per cent of these potential buyers saying that their purchases are for investment purposes.

The bulk of those looking to buy residential property say they want a new home to live in, while a number want to upgrade from their current home. Some also say that they are planning to buy a house for their children or parents.

And at least 76 per cent of those surveyed reported a monthly household income of above $5,000, allowing them to afford a property "fairly easily", observed Ms Voon and Ms Chok in the report.

Assuming that the average household (with an income between $5,000-$7,500) does not spend more than 30-40 per cent of their income on mortgage repayment, and assuming a 30-year HDB (Housing and Development Board) loan and a 90 per cent LTV (loan-to-value), the average household would be able to afford a property worth about $420,000 to $830,000, said Ms Voon and Ms Chok.

At current resale prices, this would allow them to buy a four- to five-room HDB flat including the living area, they added.

"This means that ... households in the higher brackets should have easier access to home ownership, which explains the high home ownership phenomenon in Singapore."

At the same time, 47 per cent of respondents do not have an existing mortgage, while 30 per cent of the average survey population has over $100,000 in liquid assets (cash-in-hand).

"In our view (this) could easily form a downpayment of a property (shoebox or public housing)," said Ms Voon and Ms Chok.

However, the two noted that the caution is beginning to set in within the property market, with only 21 per cent of respondents saying they will consider buying a home within the year. Many also say they prefer to hold cash than park their money elsewhere.

The survey also touched on shoebox apartments, with 6 in 10 saying that they would not buy an apartment that is less than 500 square feet in size.

Credit Suisse said that the respondents to its survey had a profile that matches the Singapore population "quite accurately", with 80 per cent living in public housing. Close to 9 in 10 own a home.