Introduction
The Singapore decoupling property sentiment study is a quarterly dipstick survey to poll our clients on their sentiment towards property investing, owning a second property and decoupling property.
The goal is to keep tabs on property owners on ground sentiments and understand the prevailing challenges they are facing with regards to decoupling property and owning a second property.
What’s in it for you ?
The insights from this study serves as a guide for all real estate consulting professionals in Singapore to better understand their client’s needs and challenges.
As advocates and specialists in the area of decoupling property we hope to increase the general awareness for property amongst Singaporean property owners.
The secondary purpose of this article goes out to like minded property investors. Understanding the current sentiment and deterrent on the ground provides an opportunity for contrarian moves, facilitating the purchase of properties before the market moves.
The team behind the study
We are a team of specialist realtors with focus on decoupling property as our subject matter expertise.
We pride ourselves for providing turn-key solutions to assist property investors in purchasing their second property without ABSD.
Our suite of solution includes
- Decoupling cost calculation
- Decoupling lawyer recommendation
- Decoupling timeline planning
- Financing and mortgage solutions
- Second property affordability calculation
- Second property research and shortlisting
- Second property purchase and execution
The economic and real estate landscape at the time of survey
The study was completed in the year of 2024. The US fed fund rates remain the centre of focus in the year 2024.
As both real estate and equity investors earnestly await the announcement of interest rate reduction.
With CPI numbers remaining high for the first half of the year. The much anticipated rate cut was signalled to be pushed back till further notice.
This translated to lukewarm response in the Singapore property market. With mortgage rates remaining between 2.9% fixed and 4% floating, both buyers and seller remain cautious with regards to trading in and out of their real estates.
2023 ABSD cooling measure have shifted buyer dynamics
In addition to macro events, the April 2023 revised ABSD rates implementation have left a lasting effect on buyer dynamics in Singapore.
It further spurred local property investors to adopt methods like decoupling property, decoupling 99-1 and sell one buy two strategies to avoid the heightened 20% ABSD tax.
While foreign buyer demand has been suppressed by the 60% ABSD rates, property demand has been sustained by local families and upgraders looking to purchase properties for their own stay.
This directly drives demand and price appreciation for property with bigger unit size and property with proximity to reputable schools
Key finding #1 – HDB property owners are less inclined to see property as an investment asset
When polled separately, HDB property owners and private property owners adopt a slightly different perspective towards property. 71% of HDB property owners expressed that their property is simply a place for their family to live in and they do not see it as an instrument to generate investment returns.
Where else, Private property owners (52%), expressed a much stronger interest in generating capital returns from property by purchasing properties that can appreciate in value.
To be objective, a sizable portion, 33% of private property owners express similar sentiment that the main priority for a property is for the family’s home stay purpose.
Insights can be drawn that even though the motivation to make money from real estate remains heightened for private property owners. The core intent of prioritising real estate purchasing for family use is still dominant amongst both HDB and Private property owners.
Key finding #2 – Both HDB and Private property owners articulated strong interest in getting a second property.
On the contrary, both groups of property owners are aligned on their interest in getting a second property. When polled if they would consider decoupling their property to purchase a second property in the near term.
69% of surveyees expressed plans on exploring the purchase of a second property in the mid term, while 23% expressed plans to decouple their property within the next 1 to 2 years.
However the motivation behind owning a second property differs between these two categories of property owners.
Private property owners using property to generate profits for early retirement and creating passive rental income to reduce reliance on income from main jobs as prime motivation.
While the HDB owner is more interested in upgrading into a second private property that can offer their family an improved standard of living with a bigger space for children to live in.
Key finding #3 – The hassle and know how with regards to decoupling remains a top deterrent for decoupling
While the general population of property owners surveyed is aware of decoupling being a go-to option to avoid ABSD on their second property purchase.
They cited the following as a key deterrent towards executing their decoupling plans.
The cost of supporting two properties and the high prevailing interest rate remains a top consideration. But surprisingly, over 20% of the surveyees polled the lack of know-how and the complexity and hassle of executing the decoupling process as the key obstacle impeding their plans of purchasing a second property.
The complexity of decoupling process is intimidating to property owners
This is particularly jarring amongst HDB property owners, 38% of HDB owners expressed that the decoupling process is complex and the financial calculation involved in calculating the cost of decoupling and mortgage is intimidating.
Quoting the verbatim of one of our clients Mr Tan Tee Tong, that hassle of going through the decoupling process and the lack of trustworthy service to facilitate that is hindering him from taking immediate next steps.
Key finding #4 – only 5% of HDB property owners are aware that HDB decoupling is no longer permissible
An interesting point to note is that only 5% of HDB property owners are aware that decoupling is no longer permissible for HDB.
Among HDB owners, BTO property owners express strong interest in finding alternative solutions for decoupling, with a strong interest in unlocking the capital gain in the BTO with the goal of upgrading to a private condominium.
Key finding #5 – For families with kids plans to leverage on 2nd property location for child primary school application
Interestingly the motivation behind decoupling differs greatly for families with children and families without children.
Families with children have expressed a dual purpose in acquiring a second property with 42% polling for the use of second property as a property to upgrade into. And to leverage on the location of the second property for child’s primary school registration
Other considerations expressed by property owners towards decoupling property
As we close, here are the other consideration expressed by property owners
- Concern over the ownership and splitting of asset in case of divorce
- Old age and short long tenure for mortgage on second property
- And of course the hassle of effort required to pull through the decoupling process
