Final copy sentiment survey report h1 2015 by Ah Meng Ang

TABLE OF CONTENTS CEO’s Note………………………………………………………………………………………………………………..3 Executive Summary………………………………………………………………………………………………….4 Methodology, Assumptions and Caveats………………………………………………………………….5 Results Analysis, Asia Overview……………………………………………………………….………….……6 Malaysia…………………………………………………………………………………………………………….…….12  Demographics………………………………………………………………………………..…………….15  Overseas Property………………………………………………………………………………………..34  Sentiments……………………………………………………………………………………………………40 Indonesia………………………………………………………………………………………………………………...52  Demographics……………………………………………………………………………………………...55  Overseas Property…………………………………………………………………………….….………73  Sentiments………………………………………………………………………………………..………….78 Hong Kong…………………………………………………………………………………………………………..……88  Demographics…………………………………………………………………………………………..…..90  Overseas Property……………………………………………………………………………………….106  Sentiments…………………………………………………………………………………………….…….112 Singapore………………………………………………………………………………………………………………..118  Demographics……………………………………………………………………………………………..120  Overseas Property ……………………………………………………………….………………….….137  Sentiments………….……………………………………………………………………………………….145 Outlook for 2015 H1 – An Asia Overview……………………………………………………………..….152

CEOâ&#x20AC;&#x2122;S NOTE We are once again pleased to share with you the findings of our seventh iProperty.com Asia Property Market Sentiment Report. This survey report reveals sentiments for the first half of 2015 in all the countries the iProperty Group operates in. Conducted for a month, 9th December 2014 â&#x20AC;&#x201C; 13th January 2015, across our marketleading network of property portals, the survey gathered close to 20,000 respondents. In all countries surveyed, similar to previous findings, affordability continues to remain a major concern. Despite all these countries having introduced multiple new measures to cool the property market and/or are looking into providing more affordable housing to the low- and middle-income group via various schemes, the top concern continues to be affordability. These are just some of the key findings that we have obtained from this report. We trust that this report will offer valuable insights to not just our consumers, but also to developers, real estate agents, local and international property buyers and investors. We wish to thank all survey respondents for sharing their valuable input on the property market. Without the involvement of these many individuals, this report would not have been possible. Should you have any comments and feedback pertaining to this report, please drop us an email at my.info@iproperty.com. Sincerely

Georg Chmiel Managing Director & Chief Executive Officer The iProperty Group

EXECUTIVE SUMMARY In the seventh iProperty.com Asia Property Market Sentiment Report for H1 of 2015, survey respondents in Malaysia (iProperty.com.my), Indonesia (Rumah123.com and rumahdanproperti.com), Hong Kong (GoHome.com.hk) and Singapore (iProperty.com.sg) revealed their intentions, preferences and motivations in acquiring property.

METHODOLOGY, CAVEATS

ASSUMPTIONS

AND

This is the seventh iProperty.com Asia Property Market Sentiment Survey Report conducted by the iProperty Group. Held twice yearly, the survey aims to provide the general public, property investors, buyers and sellers and owners, including local and expatriates with insights into the property market purely from a consumer perspective. In Malaysia, a total of 6,445 people responded to the online survey. The survey responses were taken from three collectors: A Facebook Post, a Pop-Up invite and a web link. In Indonesia, a total of 5,037 people responded to the online survey. In Hong Kong, the survey gathered a total of 4,006 respondents, the survey was designed and conducted I both English and Chinese. In Singapore, a total of 2,304 people responded to the online survey. An analysis of data from each survey questions only considered data from questions that were not skipped.

RESULT ANALYSIS – ASIA OVERVIEW In this survey, majority of respondents are male, and most are married, and belong to the 31 – 40 age bracket. Across all four countries, majority of respondents are homeowners who are living in the home they purchased, with more than 4 people in their household. In Malaysia, Hong Kong and Singapore, the largest percentage of respondents own a property. However, in Indonesia, a large percentage of respondents do not own any property. When it comes to property purchase, respondents are largely hindered by high property prices, looking for a property that they can afford and inability to afford a down payment. Sentiment towards prices in the next 6 months is mixed. In Malaysia, half of respondents are expecting prices to increase. In Indonesia, 84% of respondents think that prices will go up, while in Singapore, 49% feel that the prices will drop. In Hong Kong, respondents also predict a price increase. About half of respondents in all countries surveyed answered that have enough to cover for all their expenses. The respondents’ main motivation for purchasing property is:  For rental income  For long-term investment – build/accumulate asset  Desire to own a home of their own Majority of respondents do not own and are not looking to invest in property overseas. Most respondents would only consider purchasing 2 years from now. Reasons overseas property is attractive to respondents: Malaysia Indonesia Hong Kong Good investment Good investment Good Investment Plans to migrate or Potential capital Potential yield retire in that country appreciation is high in the future Vacation / residential purpose

Singapore Good investment Plans to migrate or retire in that country in the future Vacation / residential Plans to migrate Vacation / purpose or retire in that residential country in the purpose future

Respondents in Singapore and Malaysia prefer to purchase ‘Private condominiums / serviced apartment’, while Indonesia prefers to purchase ‘House’ overseas – which is the same as the previous survey.

QUICK OVERVIEW COMPARISON Gender

38% 49% Female

46% Hong Kong

44%

Singapore Indonesia

62%

Malaysia

51% Male

54% 56% 0%

20%

40%

60%

80%

Age Group

51 and above 41 - 50 Singapore Hong Kong

31 - 40

Indonesia Malaysia

21 - 30 Below 20 0%

10%

20%

30%

40%

50%

Occupation Other Unemployed / retired Homemaker Student

Singapore

Civil Servant

Hong Kong

Self Employed

Indonesia

Sales Clerical/ Administrative

Malaysia

Executive/ Managerial Professional/ Technical CEO/ Senior Management 0%

10%

20%

30%

40%

Marital Status

Other

Singapore

Married, with children

Hong Kong Indonesia

Married, no children

Malaysia

Single 0%

20%

40%

60%

80%

Consider Themselves

Just monitoring the market

Expatriate

Singapore Looking to rent out a property

Hong Kong Indonesia Malaysia

Interested in selling property Interested in buying property First time home buyer

20%

40%

60%

80%

No of Properties Owned

More than 4 4 Singapore

Hong Kong Indonesia

Malaysia 1 None 0%

10%

20%

30%

40%

50%

60%

Years Lived in Current Property 6% 4% 3%

All my life

More than 20 years

15% 10%

Singapore 27% 24%

11 - 20 years

Hong Kong

15%

Indonesia

22% 20% 22%

6 - 10 years

Malaysia 29%

52% 49%

0 - 5 years 0%

10% 20% 30% 40% 50% 60%

Status of Property Lived in

3% 0%

Other

10% Singapore

23% 30% 26%

Rented

Indonesia Malaysia 74% 70% 64%

Self Owned

20%

40%

60%

80%

Looking to purchase property

31%

10% 15%

Undecided

32%

13% 19%

No, not at the moment

Singapore Indonesia

22% 17% 20%

Yes, a second hand property

Malaysia

15%

Yes, a newly developed property

46%

59%

0% 10% 20% 30% 40% 50% 60%

Current household income sufficient for the amount of expenses, including any payments on debt and mortgages

0% Barely making ends meet

22% 16% 11% 10% 8%

Don't Know

Singapore Hong Kong

23%

25%

35%

Indonesia

37%

Malaysia 49%

Yes

53% 45% 0%

20%

40%

60%

66%

80%

MALAYSIA: AN UNCERTAIN MARKET ADOPTING A ‘WAIT-AND-SEE’ APPROACH AMIDST THE SECTOR’S OVERALL SLOW DOWN IN 2014 Recently, the International Monetary Fund (IMF) has said that house prices in many countries are still well above their historical average relative to income and rent. Malaysia, like some of these countries, has seen a rapid increase in property prices over the past four to five years with the excessive speculation in the property market driving property prices. However, the property market is still resilient and with the market cooling measures introduced by the Government, the market will correct itself and see growth in the coming years. The Bank Negara Malaysia (BNM) rulings are taking effect, causing banks to be more cautious in their loan criteria and tighten property financing to buyers. Therefore, buyers are seeing up to 60% to 70% in rejection rate at the first instance of application. According to BNM’s Monthly Statistical Bulletin for March 2014, in Q1 ‘14, some RM25.4 billion in property loans were approved from RM47.6 billion applied for, translating into a 46.6% rejection rate in terms of loans value. In comparison, Q1 ‘13 saw higher rejection rate at 54.6%. Less overall transactions Some markets like Kuala Lumpur and Selangor are seeing less overall transactions, but higher total transacted value. This marks a trend that reflects the nationwide property market trend. Based on the annual Property Market Reports published by the National Property Information Centre (NAPIC), the total number of transactions has dropped but there is an increased transaction values for the past three years. According to statistics from NAPIC, the country’s overall residential property transactions showed an increase in the first half-year of 2014, but this was mainly due to the primary market transitions in Johor, where people buy directly from developers. In the Klang Valley, purchases from developers dropped in the first half of 2014 and increased marginally in Penang.

Here are some updates in the property sector that might affect how 2015 pans out. Youth Housing Scheme Among some of the measures announced in Budget 2015 is the Youth Housing Scheme. The scheme offers:  A funding limit for a first home not exceeding RM500,000 for married couples aged between 25 and 40 years with household income not exceeding RM10,000. The maximum loan period is 35 years.  Monthly financial assistance of RM200 to borrowers for the first two years to reduce the burden of monthly instalments.  50% stamp duty exemption on the instrument of transfer agreements and loan agreements.  A 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance.  Withdrawal from Employees Provident Fund (EPF) Account 2 to top up their monthly instalment and other related costs. The scheme is offered on a “first-come first-served basis” for 20,000 units only. Goods and Services Tax (GST) One of the challenges that buyers will face is the GST, which will be implemented in April. Although the residential sector is 'exempted' from GST, property developers still incur GST in their 'input cost' as only zero rated sectors will not incur any GST in their input cost. This will invariably push up prices of property by between 3% and 5%. Restrictions for foreigners buying properties in Selangor The new guidelines restrict foreigners from buying all types of properties costing less than RM2 million in most of the districts in the state. Previously, the cap was set at RM1 million. The minimum price for purchases by foreigners is based on zones. Foreigners, PR holders and foreign companies are only permitted to buy residential properties that are priced at a minimum RM2 million for Zone 1 and 2, and a minimum threshold of RM1 million for those located in zone 3. Zone one encompasses the districts of Petaling, Gombak, Hulu Langat, Sepang and Klang. Zone two are Kuala Selangor and Kuala Langat while the districts under zone three are Hulu Selangor and Sabak Bernam.

Affordable housing The Government has taken several initiatives to build more affordable housing including the following.  PR1MA to build 80,000 affordable houses and eligibility raised from monthly household income of RM8,000 to RM10,000  National Housing Department to build 26,000 units under the People’s Housing Programme with an allocation of RM644 million  Syarikat Perumahan Negara Bhd (SPNB) to build 12,000 units of Rumah Mesra Rakyat and 5,000 units of Rumah Idaman Rakyat. SPNB will also build 20,000 units of Rumah Aspirasi Rakyat on privately-owned land. Success of these initiatives will largely depend on implementation to ensure that the affordable housing serves the right target market in a timely manner. A challenging 2015 The curbs announced and implemented under Budget 2014, such as the increase in Real Property Gains Tax (exit costs), the loan-to-value and prohibition of DIBS, have worked well to some extent to lower property prices or arrest the steep rise of property prices. The market is likely bracing for a possibly tougher property market condition after the implementation of the GST. Buyers will likely adopt a ‘wait-andsee’ attitude for six to nine months after the implementation of GST, which will be in line with the typical consumer behaviour experienced in most countries that implemented GST. According to the Real Estate and Housing Developers Association (REHDA), the property landscape is expected to remain challenging in 2015, amid rising costs of doing business, tighter monetary policy and the impact of a new tax system.

DEMOGRAPHICS: MAJORITY OF BUYERS ARE INTERESTED IN PURCHASING IN THE NEXT 12 MONTHS, DESPITE IMPLEMENTATION OF THE GOODS & SERVICES TAX There are slightly less male respondents in this survey compared to the last survey, down from 61% to 56%. Just like the previous few surveys, majority of respondents are still male-skewed. Gender

Female, 44%

Male , 56%

This time around, the percentages are the same as the previous survey. Married respondents and single respondents remain at 54% and 44% respectively. Marital Status Other 2% Married, with children 42%

Single 44%

Married, no children 12%

As for the age groups, the division is similar to the previous survey. Respondents are largely from 20 to 40 years old (73%). Age Group 51 and above 11%

41 - 50 14%

Below 20 2%

21 - 30 35%

31 - 40 38%

Majority of respondents are Malaysian citizens.

Residency Status

Non-resident in the country

Foreigner residing in the country

Permanent Resident

92%

Citizen 0%

20%

40%

60%

80%

100%

Most of the respondents (73%) are from Selangor and Kuala Lumpur. At a distant third and fourth place are respondents from Penang and Johor. Currently Residing In 45%

Selangor

28%

Kuala Lumpur

7% 6% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1%

Penang Johor Sarawak Perak Other Negeri Sembilan Terengganu Sabah Putrajaya Pahang Malacca Kedah

20%

40%

60%

80%

100%

The occupation of respondents surveyed is consistent with the previous survey. Most respondents are ‘Executives/Managers’, followed by ‘Professional/Technical’. Occupation 38%

Executive / Managerial Professional / Technical Self Employed Sales Student Clerical / Administrative Civil Servant CEO / Senior Management Retired Unemployed Homemaker

23% 8% 7% 5% 5% 4% 4% 3% 2% 2% 0%

10% 15% 20% 25% 30% 35% 40%

Most respondents’ (49%) annual household income are from the ‘RM90,000 and below’ group, while approximately a quarter (26%) are from the ‘RM90,001 to RM180,000’ group. The percentages are relatively the same as compared to the previous survey. In September 2014, Putrajaya announced that Malaysia’s average monthly household income has gone up 18% to RM5,900 in 2014, a significant increase from the RM5,000 monthly average recorded in the 2012 Household Income Survey (HIS). This figure that was announced by economics minister Datuk Seri Abdul Wahid Omar, and it attracted criticism that the figure may not be an accurate reflection of overall household income in Malaysia. Wahid later explained that he was referring to the mean average household income when he spoke about the increase. Mean is the aggregate value divided by the number of data points, while median refers to the value at the midway point of the set. Wahid further shared that the median household income for 2014 is RM4,258 compared to RM3,626 in 2012. Malaysian Employers Federation (MEF) secretary Datuk Shamsudin Bardan said that for 2014, wages were estimated to grow by an average of 33% for those earning below RM900 a month. This is due to the minimum wage policy that came into effect in January 2013. Annual Household Income

Prefer not to say 1%

More than RM500,001

RM300,001 - RM500,000

11%

RM180,001 - RM300,000

26%

RM90,001 - RM180,000

37%

RM30,001 - RM90,000 12%

Below RM30,000 0%

20%

40%

60%

80%

100%

Most respondents are likely to be living with their families and/or relatives, as 57% have 4 or more people living in the same household. This is in line with data from Malaysian Employers Federation (MEF). According to data from MEF, one household on average comprised 4.3 members as of 2010. The total number of households as of 2014 stands at 7 million according to a Minister in the Prime Ministerâ&#x20AC;&#x2122;s Department. No of People in a Household

6% 17%

32%

1 2 3

20%

25%

More than 4

Almost half (49%) are interested in buying property, while 21% are first-time homebuyers. These percentages are similar to the last survey, which indicates that respondents are on the lookout for good buys. Consider Themselves

49%

Interested in buying property

21%

First time home buyer

14%

Just monitoring the market Real Estate professional / property agent

Looking to rent out a property

Interested in leasing and renting property

Interested in selling property

3% 1%

Expatriate

20%

40%

60%

80%

100%

38% of respondents own a property, while 37% own 2 to 4 properties. More than a third of respondents are likely to be property investors as they own more than 2 properties. Properties Owned

More than 4

24%

39%

1 19%

None 0%

20%

40%

60%

80%

100%

Almost half (49% - same as last survey) of respondents have stayed in their current premises for 5 years or less, while almost a quarter (22%) have been in the same abode for 6 to 10 years. Years Lived in Current Premises

All my life

10%

More than 20 years

15%

11 - 20 years

22%

6 - 10 years

49%

0 - 5 years 0%

20%

40%

60%

80%

100%

A high percentage (64%), own the place they are living in. Status of Property Lived In

10% 26%

Self Owned Rented

64%

Other

Most respondents own and live in ‘Terrace houses’ and ‘Private condominium / serviced apartment’. While the percentages for those who own and live in ‘Terrace houses’ are similar, it is interesting to note that those who own ‘Private condominium / serviced apartment’ are more than those who live there. This suggests that some of the ‘Private condominium / serviced apartment’ are rented out as a source of passive income. According to a report by National Property Information Centre (NAPIC), condominium units dominate the residential sector with transactions accounting for 70% of the market compared with 30% for landed units. Type of Properties Owned 51% 44%

Terrace House Private Condominium / serviced apartment

17% 12% 7% 5% 4% 3% 2% 1%

Flat / walk-up apartment Semi - detached house Shop Office Bungalow SOHO Retail Space Factory / industrial property Hotel / Resort

20%

40%

60%

80%

100%

Online is still the preferred source of information for respondents. A distant second is newspapers / magazines, while talking to real estate agents and professionals is third on the list. This has been the preference for the past few surveys. Search for Information and News on Property

86%

iProperty.com Website 51%

Newspapers / magazines

48%

Other Web portals 31%

Refer to family members and friends

31% iProperty.com Mobile App

23%

Attend property seminars/ exhibitions

22% 9%

Television / radio 0%

20%

40%

60%

80%

100%

Information that respondents required in their decision making process is exactly the same as the previous survey. Key project details, price comparisons and reviews are crucial in aiding the process.

H1 2015 & H2 2014 Detailed information about property / facilities Property price comparisons

H1 2014 Detailed information property High quality photos

Reviews on property/location

Property price comparisons

High quality photos

Neighbourhood information

Price growth comparison

Compare features

Read reviews

Display of average asking prices

Interactive maps

about

the

Most respondents (59%) did not purchase or sell properties, while there are more buyers than sellers in this group of respondents. Based on a report by National Property Information Centre (NAPIC), most states recorded overall drop in the number of property transactions for the different subsegments, namely, residential, commercial, industrial, agricultural, development land and others. The report showed a drop in transactions for Kuala Lumpur, Selangor, Penang and Johor. All four states recorded an overall drop in transactions with Kuala Lumpur seeing a 13.4% dive compared to the last quarter of 2013. Penang recorded a marginal 0.3% drop while Johor, which enjoys one of the most buoyant market in the country as a result of Iskandar Malaysia, saw a 4.5% drop in transactions. Selangor had a 10% drop for the period under review. Sold or Purchased Property within the past 2 years Sold 5%

Purchased 29% None of the above 59%

Sold and Purchased 7%

There is a drop in respondents (from 57% to 46%) who are looking to purchase a newly developed property. Slightly less than half of that percentage is looking to purchase from the sub-sale segment. Looking to Purchase Property

No, not at the moment 19%

Undecided 15%

Yes, a newly developed property 46%

Yes, a second hand property 20%

For those that were interested to purchase a newly developed property, their top three sources of information for new properties are the same as the previous survey: 1. iProperty.com Malaysia 2. Directly from developers 3. Property exhibitions Obtain Information on New Property Launches 78%

iProperty.com website 60%

Directly from Developers Property Exhibitions

51%

Online - search engines

50% 39%

Print Ads

30%

Refer to family members and friends 18%

SMS Ads

12%

TV/Radio 4%

Videos on iProperty.tv 0%

20%

40%

60%

80%

100%

The main percentages remain unchanged from the previous survey. Almost a quarter of respondents (24%) are looking into property purchase in the next 6 months. Based on the figures released by NAPIC, the Malaysian property market is consolidating. It is not a slump which is characterised by oversupply and declining prices. Considering the interest in the property market the last couple of years, it can be concluded that this may be the first significant quarterly nosedive in the last four years. The consolidation process is expected to remain for some time as there is no impetus. Positive economic conditions do not mean an immediate return of confidence in the property market. There is always a time lag.

When to Purchase 0% 12%

25%

30% 33%

Within the next 6 months

6 - 12 months from now

1 - 2 years from now

At least 2 years or more from now

Not interested at the moment

The top two main motivations to purchase property have swapped from the previous survey. Motivation to Purchase Property 47% 39% 36% 31% 27% 26% 20% 14% 12% 12% 11% 8% 7% 7% 3%

Desire to own a home on my own For long-term investment - build/accumulate asset For rental income Affordability of homes Desire for a home in a better area Desire for a larger home For short-term investment - capital gain Change in family situation Desire for vacation home / investment property Retirement Desire to be closer to job/school/transit Job-related relocation or move Purchase home for family member or relative Desire to be closer to family/friends/relatives Desire for a smaller home

20%

40%

60%

80%

100%

This survey Desire to own a home on my own

Previous survey For long-term investment

For long-term investment

Desire to own a home on my own

For rental income

Desire for a home in a better area

Desire for a larger home

According to Cagamas (which was established by Bank Negara in 1986), the affordability of private-sector housing in the country has been affected because the persistent increase in house prices over the years has significantly outpaced the rise in household income. It also noted that access to home financing by the lower-middleincome group was a major constraint on homeownership. This might explain why the desire to own their own home is greater than the need for long-term investment at this point.

Most respondents would purchase direct from developers, while 34% will go through a real estate agent.

Property Transaction Initiated Through 3% 34%

63%

A real estate agent

Directly from the developer

Other

Affordability issues persist and that might explain respondents’ desire to own a home on their own, which seems to be more urgent than for investment. Malaysia has seen a rapid increase in property prices over the past four to five years with the excessive speculation in the property market driving up property prices. However, the property market is still resilient and with the market cooling measures introduced by the Government last year, the market will correct itself and see growth in the coming years. According to the Knight Frank Global House Price Index, it showed that while Malaysia’s housing prices have risen by 8% in the first three months of 2014 (Q1 ‘14) compared to the previous corresponding period last year where the rate of growth had slowed down. Reasons for not purchasing property at the moment 67%

Property prices are too high

41% 39% 31%

Cannot find a property that I can afford Not having enough money for a down payment Unpredictable property market Banks making it too hard to qualify for a home mortgage Lack of good financing options other Having too much debt from college and student loans Don’t consider property a good investment choice Even with the housing schemes introduced by the Government,… Prefer to rent as it is cheaper than paying a loan

20% 14% 9% 7% 5% 4% 3% 20%

40%

60%

80%

100%

Respondents that opted for 窶話anks making it too hard to qualify for a home mortgage were asked what were the main obstacles faced in getting a loan. 47% said that qualifying/getting their loan approved as the main obstacle followed by a high personal debt (20%). According Minister in the Prime's Minister Department Datuk Idris Jala in June 2014, Malaysia's escalating household debt, which is at 86% of Gross Domestic Product (GDP) is not alarming. Malaysia's household debt-to-GDP ratio is among the highest in Asia compared with about 60% in 2008. The impairment loan ratio was at 1.8%. According to the Financial Stability and Payment System 2014 Report issued by Bank Negara Malaysia, the growth in aggregate household debt continued to moderate as intended, expanding by 9.9% in 2014, the slowest pace since the peak in 2010. 47.1 % of household sector debts were attributed to the purchase of properties. Obstacles Faced in Trying to Get a Loan 4%

13%

47% 16%

20%

Other Affording a higher down payment

Insufficient income / salary required High Personal Debt

50% of respondents are expecting property prices to go up while 26% believe that prices will stay the same. Some of the measures in Budget 2014 did achieve the results of lower property prices or arresting the steep rise of property prices. However, one of the challenges that buyers will face next year is the Goods and Services Tax (GST) which will be implemented in April. Some respondents are likely to adopt a â&#x20AC;&#x2DC;wait-and-seeâ&#x20AC;&#x2122; approach due to the uncertainties on the impact of the GST. Although residential properties are zero-rated for GST, materials and services supplied in the development process will be subject to GST and these costs are likely to be passed on to homebuyers. This might invariably push up house prices to a small extent of say, 3% to 5%. Pricing is determined by demand and the market is expected to be impacted for at least the first two quarters after GST takes effect. After April, the market should find its own level and even out a little. Any price increase will certainly burden house buyers in terms of affordability. Additionally, banks may also take a more conservative approach in approving new loans, which would affect the chances of those hoping to buy houses in 2015. How will the property market fare in the next 6 months

Prices will remain about the same 26%

Unsure 10% Prices will go up 50%

Prices will go down 14%

Almost half of respondents (45%) have sufficient funds for all expenses. However, 25% is unable to manage their expenses, and 22% are just making ends meet. Is your current household income is sufficient for the amount of expenses you have, including any payments on debt and mortgages

Barely making ends meet 22%

Don't know 8% Yes, definetely 45%

No, its unaffordable 25%

The top five considerations have been consistent for several surveys, and it is no different this time around â&#x20AC;&#x201C; Location, Price, Size, Security and Facilities. Factors of Consideration 9.4 8.7

Location Price Size Security Facilities Potential capital gain Potential rental yield Status of Property Developer's track record and reputation Financing eligibility/process Recommendations Eligibility for housing schemes/programs

8 7.7 7.3 7.1 7.1 6.9 6.9 6.6 6.5 6.4 0

The top three most popular types of property for purchase are: Types of Property Interested in Terraced House Private condominiums/serviced apartments Semi-detached house Homes under PR1MA Homes under Malaysia My First Home Scheme Flat/walk-up apartment Detached House Bungalow Office/Retail Youth Housing Scheme Homes under Malaysia My Second Home Scheme Government Housing Student Housing Retirement Homes Not Considering Industrial Hotels

58% 55%

31% 21% 15% 15% 14% 12% 11% 10% 7% 7% 6% 4% 3% 2% 2% 0%

20%

40%

60%

80%

100%

Respondents that opted for property under the affordable housing scheme were asked if there was sufficient information on the schemes available and majority of respondents felt that there is insufficient information and more detailed information is required. Sufficient Information on various affordable housing schemes More detailed information is required 36%

Yes, information is easily accessible 15%

No, there is no sufficient information provided 49%

89% of respondents feel that it is challenging to find homes in the range of RM500,000. This is unsurprising as most respondents are planning to purchase properties in Selangor and Kuala Lumpur. The softening market is evident in Selangorâ&#x20AC;&#x2122;s residential market. There is a slowdown of transactions in Selangor, with transactions dropping compared with a year ago and against the last three months of 2013. Volume is concentrated in the RM500,000 to RM1 million range. The indication is that developers are offering housing within this price range. In Kuala Lumpur, the number of properties below RM300,000 is becoming increasingly limited, which explains why transactions for such properties are decreasing. NAPIC research shows that the greatest number of transactions are for residential properties priced between RM500,000 and RM1 million. Overall, the total value of properties transacted dropped for all price segments (residential, commercial, industrial, agricultural, development land and others), with the exception of properties costing RM1 million and above. There are a couple of ways to read this â&#x20AC;&#x201C; people are either holding on to their cash waiting for prices to fall or they may want to buy but have difficulties getting a loan.

How easy do you think it is to find a home within the RM500,000 bracket? 100% 80% 60%

43%

46%

40% 20%

0% Very Challenging

Somewhat Challenging

Very Easy

Somewhat Easy

There is a shift in respondents’ budget, with an increase of respondents (from 54% to 63%) with a budget below RM500,000. Respondents with budget in the RM500,001 – RM800,000 bracket has decreased from 33% to 27%. According to statistics from the National Property Information Centre (NAPIC), the country’s overall residential property transactions showed an increase in the first halfyear of 2014. This was due mainly to the primary market transitions in Johor, where people buy directly from developers. In the Klang Valley, purchases from developers dropped in the first half of 2014 and increased marginally in Penang. In the second half of 2014, the Johor market reversed, according to developers and real estate personnel there.

Budget to Purchase 3% 7% 27% 63%

Below RM500,000

RM500,001 - RM800,000

RM800,001 - RM1 Million

RM1 Million to RM3 Million

OVERSEAS PROPERTY: INCREASED INTEREST, WITH AUSTRALIA STILL GARNERING THE MOST ATTENTION 96% of respondents do not own properties overseas. The remaining 4% has property in Singapore (31%), Australia (20%), and United Kingdom (8%). The properties were mainly purchased via a local agent from country of origin (48%), and developer (42%). There is a 6% increase in purchasing from local agents, which might mean that respondents are looking towards the secondary market. Own Property Overseas Yes 4%

No 96%

Where the property was purchased Singapore Australia Other The United Kingdom India Indonesia China The United States New Zealand Philippines Thailand Vietnam Hong Kong

31% 20% 16% 8% 4% 4% 4% 4% 3% 3% 2% 1% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

There is a drop (from 23% to 19%) of those who are interested in purchasing overseas property, and a slight increase of those who are not interested. Looking to invest in property overseas

49%

32%

Undecided

19%

Yes

10%

20%

30%

40%

50%

Most respondents (59%) did not attend seminars of exhibitions on overseas properties. This might be due to the lack of coverage on such properties. Attended seminars/property exhibitions before purchasing property overseas

59%

41%

Yes

10%

20%

30%

40%

50%

60%

The top three preferred overseas property location has remained consistent throughout five surveys â&#x20AC;&#x201C; Australia, Singapore, and the United Kingdom. Malaysia practises the progressive built scheme where payments are made in progressive instalments until the project is completed. On the other hand, Australia, New Zealand and the United Kingdom, practise the 10/90 payment scheme where buyers are required to put down 10% of the property price upfront while the balance is required only when the project is completed. Additionally, developed countries like the United Kingdom, Australia and Singapore are currently having a good run with their economy. Hence, the population will experience an increase in purchasing power which then leads to a rise in demand of assets, including property. Country of preferance to purchase 39%

Australia Singapore The United Kingdom Thailand New Zealand Other The United States Indonesia China Vietnam Philippines India Hong Kong

16% 12% 7% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0%

10%

15%

20%

25%

30%

35%

40%

Private Condominium / Serviced Apartment’ (64%) has been a perennial favourite for the past few surveys. The top two budget brackets for overseas properties are ‘Below RM500,000’ and ‘RM500,001 to RM800,000’. Type of Property Interested in 64%

Private Condominium Terrace House Flat/walk-up apartment Semi-detached house Bungalow SOHO Shop Office Hotel/Resort Retail Space Factory/industrial

27% 21% 17% 16% 8% 5% 4% 4% 1% 0%

10%

20%

30%

40%

50%

60%

70%

Price Range to Purchase

RM3 Million and above

20%

RM1 Million - RM3 Million

21%

RM800,001 - RM1 Million

27%

RM500,001 - RM800,000

30%

Below RM500,000 0%

10%

15%

20%

25%

30%

There is a significant increase (from 40% to 59%) in respondents who are looking into overseas property investment two years from now, while inversely; there is a drop (from 35% to 19%) of those who do not have plans of purchasing. When to purchase property overseas 59% 60% 50% 40% 30%

19%

17%

20% 10%

0% Within the next 6 - 12 months At least 2 years 6 months from now or more from now

No Plan

The top two reasons for purchasing overseas property has been very consistent â&#x20AC;&#x201C; good investment and migration to that country in the future. Investments in Australian properties from Malaysia are about RM125 million per annum. Rental yields for residential properties there are high compared to Malaysian standards. As for the United Kingdom, the English pound has depreciated from previous high of RM7 to around RM5 to the pound, which makes UK investments more affordable. The Singaporean dollar is one of the strongest in Asia and has appreciated in value over the past few years. Demand also outpaces supply which may cause property prices to continue to rise in Singapore. Why is property in that location attractive

39%

it is a good investment

22%

I expect to migrate or retire to that country in the future

11%

For vacation/residential purpose For my children to study abroad

The potential yield if high

The economic slowdown in that country has brought prices down

The exchange rate works in my favour

The country has housing policies that encourage foreign ownership

3% 0% 5% 10% 15% 20% 25% 30% 35% 40%

Consistent with answers for information search for local properties, respondents look to online sources, followed by newspapers / magazines. Source of information is unlikely to change as there is an increasing dependency on Internet and mobile devices. How They Search For Property Overseas

49%

iProperty.com

48%

Other web portals (google, yahoo, etc)

39% 37%

Newspapers / magazines

33%

Talk to real estate professionals / property agents

28%

Refer to family members and friends

Other

10%

20%

30%

40%

50%

SENTIMENTS: MOST RESPONDENTS FEEL THAT MEASURES INTRODUCED IN BUDGET 2015 WILL NOT ADDRESS AFFORDABILITY CONCERNS DUE TO THE CURRENT COST OF LIVING AND RISING PROPERTY PRICES. It is more appealing for respondents to buy, as opposed to renting. The property sector is expected to slow down further this year following cooling measures and tougher lending conditions implemented in 2014. The changing dynamics of lower oil prices on the economy are still unraveling. But economists are not looking at any rate hikes for Malaysia in the near term, unless there are changes in the external sector, and this is something which will work well for the property sector. While oil price is a factor, the goods and services tax (GST) is another. There was renewed interest in property transactions in the second half of 2014. CIMB Research noted that buyers will likely adopt a ‘wait-and-see’ attitude for six to nine months after GST’s implementation, which will be in line with the typical consumer behaviour experienced in most countries that implemented GST. The net effect is that 2015 could end up being a similar year to 2014 in terms of property transactions.

46%

Buying

37%

17% More appealing Neutral Less appealing

26%

Renting

20%

37%

40%

37%

60%

80%

100%

72% of respondents are more worried and concerned about the property market in the next five years. Additionally, on a scale of 1 (very affordable) to 10 (not affordable at all), the respondents chose an average of 7.25, which was close to the previous survey. The top three concerns regarding the property market are: ď&#x201A;ˇ Rising property prices ď&#x201A;ˇ Economic and political uncertainties ď&#x201A;ˇ Implementation of GST Property prices are sky-high and the middle-income wage earners might be compelled to go for rented homes or choose a place at the outskirts of the city. Apartments or condominiums in Kuala Lumpur and Selangor usually cost higher than RM500,000 and landed properties at matured areas such as Taman Tun Dr Ismail or Petaling Jaya are often priced RM1 million and above. This makes it nearly impossible for a person earning RM5,000 per month to own a home.

How do you view the property market in the next five years

72%

More worried and concerned

17%

More hopeful and confident

11%

Not sure 0%

20%

40%

60%

80%

Main Concern About the Malaysian Property Market 53%

Affordability & rising property prices

17%

Economic and political uncertainties The implementation of the GST will increase prices across the board

16% 10%

Stringent home financing and high interest rates

Errant developers and poor building quality

Other

10% 20% 30% 40% 50% 60%

The five main areas that respondents think will be the next investment hotspots in Selangor are Petaling Jaya, Ara Damansara, Puchong, Shah Alam and Cyberjaya. Hot Spots Within Selangor Petaling Jaya Ara Damansara Puchong Shah Alam Cyberjaya Bukit Jalil Kajang Putrajaya Sungai Buloh Bangsar Semenyih Seri Kembangan Klang Rawang Other Gombak Rawang

29% 26% 25% 23% 21% 21% 18% 17% 17% 14% 14% 10% 9% 6% 6% 5% 0%

20%

40%

60%

80%

100%

Outside Selangor, the top five areas have changed slightly from the last survey. Melaka dropped to fifth spot, while Ipoh, Perak, makes an appearance and Nusajaya, drops out of the top five this time around. Johor's House Price Index (HPI) contracted 1.6% quarter-on-quarter in Q2 2014, the first decline in 27 months on weaker buyer sentiment due to the Governmentâ&#x20AC;&#x2122;s cooling measures in 2014. The take-up rate for new launches is generally slowing down as demand for recent property launches has not been as robust as H2 2012 to H1 2013. Hot Spots Outside Selangor 4% 5% 6%

Other Kuantan, Pahang Kuching, Sarawak

12%

Kota Kinabalu, Sabah

28% 30% 32% 32% 33%

Nusajaya, Johor Johor Bahru, Johor Ipoh, Perak Melaka Nilai, Negeri Sembilan

54%

Iskandar Malaysia, Johor

64%

Georgetown, Penang

10%

20%

30%

40%

50%

60%

70%

Similar to the previous survey, majority of respondents (67%) think that foreign property buyers have driven up property prices in Malaysia. In September 2014, a new set of guidelines on property purchases in Selangor by foreigners, permanent residents (PR) and foreign companies was introduced. Generally, the new guidelines restrict foreigners from buying all types of properties costing less than RM2 million in most of the districts in the state. Previously, the cap was set at RM1 million. 46% of respondents feel that this implementation of guidelines in Selangor is fair and should be implemented across Malaysia.

Are Foreign property buyers driving up property prices in Malaysia

15%

I don't know

18%

67%

Yes 0%

10%

20%

30%

40%

50%

60%

70%

Were the new Guidelines introduced in Sepetember 2014 Yes, but it should be implemented all across Malaysia, not just Selangor

46%

No, it does not affect them much due to the currency exchange

19%

Yes

17%

I don't know

No, the limit should be higher

9% 0%

20%

40%

60%

Slightly more than half (up from 41% in the previous survey to 53%) of respondents will continue to invest in property despite to the upcoming GST. Research house JF Apex Research said that property transactions are expected to decline by about 10%, with house prices remaining flattish or rising slightly by 3% to 5% upon the implementation of GST on building materials. It anticipates the property market to moderate across the board, especially in the Klang Valley, Penang and Johor for all types of residential property, due to the challenging economic outlook, stringent mortgage approval, the Government’s cooling measures and the ‘wait-and-see’ approach by buyers upon the implementation of the GST. CIMB Research said property sales in the first quarter of the year would maintain the momentum from the second half of 2014 on the back of renewed confidence and expectations that property prices would rise post-GST implementation.

Will the upcoming April 2015 implementation of the Goods & Services Tax stop you from considering a real estate investment?

No 53%

Yes 47%

Majority of respondents think that GST will result in higher prices. Senior realtors said residential prices are likely to spike by up to 4% and commercial properties by between 6 and 8.5% once GST kicks in, but expect prices to normalise over the course of a year or so. In terms of affordability, the general understanding is that the GST will inevitably add cost to houses in the primary market, as a result of developers incurring input costs but unable to charge those costs as output costs for claim. Based on the experience of several countries that implemented GST, there has been a pick-up in retail sales ahead of the value-added tax, particularly three to six months before the implementation. Retail sales then eased in those countries in the six months after GST before rebounding in the nine to 12-month period after. If Malaysia goes through the same pattern and property sales also mimic retail sales, the second half of 2015 will be a trying period for developers.

Do you think the implementation of the Goods & Services Tax (GST) in 2015 will drive up the prices of goods and services, including property in Malaysia? No 6%

Unsure 11%

Yes 83%

78% of respondents think that the various measures do not address the need for affordable housing due to the current cost of living. The Budget 2015, announced in October 2014, was one that addressed the issues of home ownership at affordable prices. Prime Minister Datuk Seri Najib Tun Razak announced in the Budget that the Government is extending the 50 per cent stamp duty exemption on instruments of transfer and loan agreements, as well as increasing the purchase limit from RM400,000 to RM500,000, through Dec 31, 2016. EPF Head of Economics and Capital Markets Nurhisham Hussein said that Budget 2015 shows a fine balance between delivering fiscal prudence with a sensitivity and responsiveness to the needs and aspirations of Malaysians. In view of the rapid increase in property prices, the middle- and low-income earners have had difficulty in obtaining affordable housing and home financing. Thus, the EPF welcomes the introduction of the Youth Housing Scheme for first-time homebuyers.

Do you think that the various measures introduced in Budget 2015 addresses the need for affordable housing in the country?

No, with the current cost of living, it still remains unaffordable

78%

22%

Yes

20%

40%

60%

80%

Slightly more than half, 54%, think that there are still insufficient units of affordable housing. There is a strong demand for affordable residential properties in major urban centres. To date, around 890,000 potential buyers have registered for PR1MA houses nationwide. Perbadanan PR1MA Malaysia (PR1MA) eyes to deliver its first 600 affordable home units by year-end. The units will come from its projects in Kuala Ketil (Kedah) and Bertam (Penang), with 300 units respectively. PR1MA recently launched and opened seven projects for application. They are PR1MA @ Bandar Meru Raya, Perak; PR1MA @ Alam Damai, KL; PR1MA @ Kuala Ketil, Kedah; PR1MA @ Sungai Petani 1, Kedah; PR1MA @ Terbrau, Johor; PR1MA @ Bandar Layangkasa, Johor and PR1MA @ Melaka Tengah 1, Melaka. Aside from the seven projects, PR1MA will also open for application 14 other residential projects soon. To enable more people to own houses, the ceiling of household income is raised from RM8,000 to RM10,000. According to the Economic Report 2014/2015 released In October 2014 by the Ministry of Finance, PR1MA planned to start building 31,469 units by end of 2014. This means the agency tasked with implementing the affordable housing programme did not deliver the targeted 80,000 homes each year. By the end of 2014, PR1MA was to deliver 160,000 homes and come 2015, it should construct 240,000 units using the total of RM2.8 billion allocated by the Government. Some parties have criticised the unrealistic targets of PR1MA.

With the RM1.3 billion allocated to affordable housing (143,000 affordable housing units under the 1Malaysia People’s Housing Programme (PR1MA) (80,000 units); the National Housing Department’s People’s Housing Programme (26,000 units) and Syarikat Peruma

54%

No, not enough was done

40%

Yes, but this is merely the starting point

Yes, enough was done

10% 20% 30% 40% 50% 60%

Half of respondents felt that it is only fair to have a similar Youth Housing Scheme for young unmarried homebuyers. The Youth Housing Scheme is a smart partnership between the Government, Bank Simpanan Nasional, the Employees Provident Fund and Cagamas. It will certainly benefit young couples who wish to own a home. National House Buyers Association (HBA) has urged young people to grab this opportunity which is offered on a â&#x20AC;&#x153;firstcome first-served basisâ&#x20AC;? for 20,000 units only. The scheme offered a funding limit for a first home not exceeding RM500,000 for married youths aged between 25 and 40 years with a household income not exceeding RM10,000. These first-time homeowners will also receive RM200 monthly financial assistance to help with monthly installments, 50% stamp duty exemption, as well as a 10% loan guarantee so that they could obtain 100% financing. Borrowers can also withdraw from Employees Provident Fund (EPF) Account 2 to top up their monthly instalment and other related costs.

With the Youth Housing Scheme (20,000 units) catered to married couples between the ages of 25 and 40, should the government have implemented a similar scheme for young, unmarried homebuyers?

50%

Yes, it is unfair for single people Yes, but it is understandable as this puts two people under one roof

29%

No, it only makes sense to cater to young married couples

21% 0%

10%

20%

30%

40%

50%

50% of respondents agree that lower tax rate will make a difference, but it will be offset by GST. With the implementation of the Goods and Services Tax (GST) in April, 300,000 individuals will no longer need to pay income tax as the income tax rate will be reduced by one to three percentage points. Prime Minister Datuk Seri Najib Razak said those with a family and income of RM4,000 per month would also be exempted from paying income tax.

Will the lower income tax rate of approximately 5.3% make a big difference to your personal disposable income?

Yes, but with 6% charged for the GST it might not make a difference

50%

No, it does not make a significant difference

28%

Yes, it will be nice to have that extra money

22% 0%

10%

20%

30%

40%

50%

46% of respondents opine that the RPGT self-assessment policy might be abused, while 32% agree that it is a move in the right direction. Following the recent Budget announcement, with effect from Jan 1, 2015, the buyer has to retain 3% (as opposed to 2% currently) of the total value of the purchase price and pay it to the Government. In addition, RPGT will come under the Self-Assessment System from the year 2016 onwards. Under the Self-Assessment System, the seller will need to pay the balance RPGT, i.e. the difference between the RPGT liability and the 3% retained for remittance to the Government once the disposal is completed and not at the point when the Notice of Assessment is issued (which is the current practice).

The self-assessment of the Real Property Gains Tax (RPGT) in 2016 isâ&#x20AC;Ś

46%

A policy that may be abused

32%

A move in the right direction

Something that should have been implemented long ago

23%

10%

20%

30%

40%

50%

46% of respondents think that the construction of more rail lines in Greater Klang Valley will help with traffic jams. In his 2015 Budget speech, Prime Minister Datuk Seri Najib Razak announced that the Government would allocate RM9 billion for the third LRT line and RM23 billion for the construction of the 56km second MRT Line from Selayang to Putrajaya. The Government also announced that several infrastructure projects would be implemented this year, including the construction of the 59km Sungai Besi-Ulu Klang Expressway at a cost of RM5.3 billion, the 47km Damansara-Shah Alam Highway (RM4.2 billion) and the 36km Eastern Klang Valley Expressway (RM1.6 billion).

RM32 billion has been allocated to the construction of more rail lines in Greater Klang Valley while multiple highways have also been financed for construction. Do you think this will help alleviate traffic jams in the area?

I don't think it will have much effect at all

27%

No, it will make things worse due to the construction work

27% 46%

Yes 0%

10%

20%

30%

40%

50%

INDONESIA: SLOWER AND CHALLENGING MARKET CONDITIONS, BUT STRONG DEMAND IS EXPECTED DUE TO LONGSTANDING HOUSING BACKLOG PROBLEM According to statistics from the World Bank, Indonesia has experienced a GDP growth rate of between 5.8% to 6.2% since 2010 after the global financial crisis. Coupled with a relatively young and educated population, this translates to a growing middle class and an increasing level of purchasing power.

After taking office in October 2014, Indonesian President Joko Widodo, also known as Jokowi, faces a number of crucial medium-term challenges, including poverty, inadequate infrastructure and energy subsidies that cost the country tens of billions of dollars annually. Indonesia will also need to address issues in its labour and financial markets. And it will need to learn how to better ride the turbulence in the global economy, according to economists. Jokowi, whose rise from boyhood in an urban slum in Central Java Province to victory in Indonesiaâ&#x20AC;&#x2122;s presidential election on 9 July 2014 has made him a political phenomenon. He has said that the widening gap between the countryâ&#x20AC;&#x2122;s rich and poor is one of its most pressing problems.

The Indonesia Property Watch (IPW) expects that property prices in Indonesia will rise in early 2015 as a result of the recent subsidised fuel price hike. On 18 November 2014, the Indonesian government raised prices of subsidised low-octane gasoline and diesel by more than 30% in an effort to create more fiscal room for economic and social development. The central bank responded to this move by raising its key interest rate (BI rate) by 25 basis points to 7.75% in an attempt to combat accelerated inflation. For property developers, higher subsidised fuel prices and the higher BI rate imply higher construction costs and higher borrowing costs, meaning that they may raise sales prices to offset losses. However, higher borrowing costs also cause reduced purchasing power of the Indonesian people. Ali Tranghanda, Executive Director at the IPW, said that for every 1% point interest rate increase, people’s purchasing power is reduced by 4 to 5%. However, as higher subsidised fuel prices have a multiplier effect on inflation - and considering that growth in the Indonesian property market is currently slowing Indonesian consumers may see their purchasing power reduced by up to 30%. At the Asia Pacific Economic Cooperation (APEC) convention, Jokowi invited foreign investors to support his Government’s programme to build and improve ports and other transportation infrastructure. If Jokowi is able to deliver on this, the infrastructural issue could be minimised, and eventually providing significant opportunities for logistic operators and developers. Deceleration in growth, but still a hot property market in Southeast Asia Indonesia’s property industry has witnessed consistent growth in recent years. The country’s positive economic climate in tandem with a growing middle-class have boosted domestic demand and increased developers’ confidence to continuously launch property projects in Indonesia. This has resulted in higher sales of most of the property industry’s sub-sectors as well as higher rental rates. However, the first half of FY14 saw some deceleration in growth due to a challenging macroeconomic condition marked by high interest rates, high inflation, depreciating currency and low GDP growth. Property firms have held the government’s most recent mortgage regulation, as well as the country’s macroeconomic conditions and political uncertainty during the elections, responsible for their below average performance during the first six months of the year. The biggest pressure came from Bank Indonesia’s (BI) loan-to-value (LTV) regulation, which requires first-time home buyers to make a minimum down payment of 30% of the value of the house. Nonetheless, due to limited land availability and persistent demand, the industry is expected to revive and occupancy levels are likely to rise in the near term. Backed by Indonesia’s developing economy, especially domestic consumption, average rental rates for offices and retail space are also expected to increase along with occupancy.

This country of 250 million has experienced its gross domestic product quadruple in the last 10 years and is now one of the hottest property markets in Southeast Asia. With an average square foot cost of USD$240 and rental yield of around 7%, Indonesia on the whole seems highly compelling. Jakarta is a bustling home to ten million people and some of the most terrible traffic in Asia – but has a rental yield of up to 11%. You can get an apartment in the Golden Triangle for USD70,000, with a yield of more than 10% and good prospects for capital appreciation. Most efficient property market in Asia Indonesia has the most transparent and efficient commercial real estate market in the Asia Pacific region according to Cushman and Wakefield’s 2014 Emerging and Frontier Markets report. The study focused on office and retail property in 42 emerging nations, excluding Brazil, Russia, China and India. Demand for commercial property in Indonesia has been strong, even while the country’s multinational companies had a “wait-and-see” approach. However, a large office supply could weaken the segment’s growth in Jakarta’s central business district. Indonesia ranked 5th in the world and was the only country in Asia to be in the top ten. The country scored well in several categories, including the amount of bureaucracy and the ease of leasing real estate which have both been improving along with the rapidly developing Indonesian economy. Analysts are wary of real estate investment in emerging markets, where the risk is generally higher than in established developed markets. While countries with high a geopolitical risk have fallen out of favour, the report also noted that there are significant growth opportunities across many emerging and frontier markets. Property investors see strong population growth, an increasingly educated and affluent labor force and more transparent governments as key factors for expansion.

DEMOGRAPHICS: MARRIED INDIVIDUALS LIVING IN HOUSES WITH BUDGET OF LESS THAN IDR500MIL FOR PROPERTY PURCHASE There are slightly less males, down from 69% in the previous survey to 54%, in this survey. Similar to the previous survey, most respondents (44%) fall into the 31-40 age group. These figures are similar to Malaysia.

Gender

46% 54%

Male Female

Age Group

Above 50

16%

41 - 50

44%

31 - 40 33%

21 - 30 2%

Below 20 0%

10%

20%

30%

40%

50%

Majority of respondents (74%) are married and almost all respondents (99%) are citizens of Indonesia. Marital Status

Other

64%

Married, with no children 10%

Married, with children

24%

Single 0%

10%

20%

30%

40%

50%

60%

70%

Residency Status

98%

Indonesian Citizen

Non Citizen residinf in Indonesia

Not living in Indonesia

20%

40%

60%

80%

100%

There is a slight drop (37% from the previous survey to 27%) in respondents from DKI (Daerah Khusus Ibukota) Jakarta (Special Capital Region of Jakarta). The percentage of respondents from West Java (21%) and East Java (12%) is similar to the previous survey. Currently Residing In DKI Jakarta Jawa Timur Jawa Tengah Bali Kalimantan Timur Nusa Tenggara Barat Riau Jambi NAD 0%

12%

9% 8%

3% 3% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1%

Sumatera Utara

21%

10%

15%

20%

25%

28%

30%

Most respondents work as ‘Clerks / Administrators’ (38%), while 18% are entrepreneurs. The third largest percentage of respondents is Housewives, taking over ‘Executive/Managers’, which was in the third spot in the previous survey. Current Occupation 18%

Entrepreneur Homemaker Student Retired Civil Servant Clerical / Administrative Sales Executive / Manager Profesional CEO / Senior Management

11% 3% 1% 9% 38% 6% 7% 7% 1% 0%

10% 15% 20% 25% 30% 35% 40%

A large percentage (59%) fall into the â&#x20AC;&#x2DC;Below IDR100 millionâ&#x20AC;&#x2122; annual household income, which is the same percentage as the previous survey. The second largest percentage, 16%, earn between IDR101 million to IDR250 million. Indonesia is a country of 250 million people and, by one estimate, its number of middle class and wealthy consumers will nearly double to 135 million by 2020. Indonesia has about 100 million people living on USD2 a day or less, and income levels for poor Indonesians are rising at a slower pace than for middle-class and affluent Indonesians. Above and beyond the recent election results, analysts say that rising income levels have given consumers more power to spend, in particular on trendy international brands that flood the market.

Annual Household Income 15%

Prefer not to say More than IDR1,000,000,001

IDR 500,000,001 - IDR1,000,000,001

2% 5%

IDR250,000,001 - IDR500,000,000

16%

IDR100,000,001 - IDR 250,000,000

59%

Below IDR100 million 0%

10%

20%

30%

40%

50%

60%

A larger percentage, up from 30% in the previous survey to 37%, are observers. The next largest group of respondents (30%) is first-time homebuyers. Consider Themselves

37%

Just monitoring the market

30%

First time home buyer

10%

Don't own a property and looking to rent

Real Estate Professional / Property Agent

Looking to sell a property

Property Investor

Looking to rent owned property

0% 5% 10% 15% 20% 25% 30% 35% 40%

45% of respondents do not own any property, while 37% own one property. No of Properties Owned

More than 4

10%

37%

45%

None 0%

10%

20%

30%

40%

50%

Most respondents own (76%) a house and live (87%) in a house, and more than half of respondents (55%) have lived in their current home for less than 5 years. Type of Property Owned

76%

Landed Property 27%

Land 12%

Shop House

Other 0%

20%

40%

60%

80%

Currently Living In

87%

Rumah 7%

Kos-kosan Kios / Ruko

Tanah

Condominium

Flat / Walk up Apartment

1% 0%

20%

40%

60%

80%

100%

Years Lived in Current Property

16%

More than 20 years

11%

11 - 20 years

18%

6 - 10 years

55%

0 - 5 years 0%

10%

20%

30%

40%

50%

60%

65% of respondents live with 4 people or more in their respective household. Only a third of respondents are currently renting, and there are more buyers than sellers in this survey. No of People in a Household

35%

More than 4 30%

4 21%

3 10%

2 4%

1 0%

10%

15%

20%

25%

30%

35%

Status of Property Occupied

30%

Owned 70%

Rented

Sold or Purchased Property in the Last 2 years

65%

None of the above 20%

Purchased 9%

Sold

Sold and purchased 0%

10%

20%

30%

40%

50%

60%

70%

The key sources of information are the same as the previous survey, although the sequence has changed for the second to fourth preference. This survey Online portals References from friends and family Property exhibitions Magazines

Previous survey Online portals Property exhibitions Magazines References from friends and family

Search for Information on property and property news

74%

Rumah123.com

48%

Online Portals (Google, Yahoo, dll)

32%

Family and Friends Property Exhibitions

29%

Magazines / Newspapers

29% 11%

Talk to real estate agents / professionals

Television/ Radio

20%

40%

60%

80%

South Jakarta is popular with 38% of respondents as a purchase destination, followed by East Jakarta, Central Jakarta and West Jakarta.

Where they want to purchase

38%

Jakarta Selatan 21%

Jakarta Timur Jakarta Pusat

17%

Jakarta Barat

17% 7%

Jakarta Utara 0%

10%

20%

30%

40%

Bogor (West Java) and Tangerang (Province of Banten) are the preferred locations for property purchase. Out of Greater Jakarta, the top three preferred locations are Bandung, Yogyakarta, and Surabaya. In the recent years, there has been an important shift which occurred in the larger cities of Indonesia such as Jakarta, Bandung and Surabaya. These cities are dominated by the presence of skyscrapers in the form of apartments and offices space where the Central business districts have seen major property developments. In Jakarta, the property market was so buoyant that in 2013, almost all new real estate projects were sold before actual construction, transpiring the demand to exceed that of supply. Preferred location in Greater Jakarta

37%

Bogor 30%

Tengerang 17%

Bekasi

16%

Depok 0%

10%

20%

30%

40%

Which areas out of Greater Jakarta would be your preferred location to purchase property

39%

Bandung 28%

Yogyakarta 19%

Surabaya 8%

Medan 6%

Makassar 0%

10%

20%

30%

40%

77% of respondents are interested in purchasing residential properties. They would seek information online, exhibitions, magazines, directly from developers, and friends and family. The preferences are the same as previous survey.

Looking to purchase a property

10%

Undecided

13%

17%

Yes, second hand property

60%

Yes, newly developed property 0%

10%

20%

30%

40%

50%

60%

More respondents are looking at the long term compared to the previous survey. 38% (up from 29%) are looking to purchase property at least two years from now

When do you intend to buy a property?

38%

At least 2 years or more from now 27%

1 - 2 years from now 19%

6 - 12 months from now

16%

In the next 6 months 0%

10%

20%

30%

40%

77% of respondents would go direct to developers if they are interested in purchasing.

How would you purchase residential properties from developers?

77%

From real estate agents

23%

Directly from Developers

20%

40%

60%

80%

The top three reasons hindering respondents from purchasing at this point are: 1. Insufficient funds for down payment 2. Property prices are too high 3. Trouble locating affordable properties

If you are not interested in buying property at this point, what is holding you back from buying property?

69% 60%

Not having enough money for a down payment Property prices are too high

32%

Cannot find a property that I can afford Even with the housing schemes introduced by the Government,â&#x20AC;Ś Banks making it too hard to qualify for a home mortgage Lack of good financing options Unpredictable property market Prefer to rent as it is cheaper than paying a loan Having too much debt from college and student loans Donâ&#x20AC;&#x2122;t consider property a good investment choice

20% 13% 11% 8% 6% 5% 3%

0% 10% 20% 30% 40% 50% 60% 70%

The main obstacles of obtaining mortgage seem to be directly related to purchase obstacles. 1. Income / Salary 2. Downpayment 3. Economy / Interest rate Main obstacles in trying to obtain a mortgage Insufficient income / salary required

35%

Affording a higher down payment

28%

Econony/ interest rates

23%

Qualifying/getting loan approved

High Personal Debt

5% 0%

5% 10% 15% 20% 25% 30% 35%

As 76% of respondents are married, it is unsurprising that a large percentage (68%) make financial decisions with their respective partners. How do you make financial decisions in your home I share the financial decisions with my partner, spouse or other person in myâ&#x20AC;Ś

68%

I make my own financial decisions

23%

I make all financial decissions myself

23%

My partner or someone else in my household makes all financial decisions

7% 2%

I consult with a financial planner 0%

10% 20% 30% 40% 50% 60% 70%

83% of respondents think that property prices will increase in the next 6 months. Indonesia’s property market has boomed in recent years with land prices in Greater Jakarta and Surabaya rising at a compound annual growth rate (CAGR) of around 35% since 2009. Indonesia’s property market is now slowing down, despite robust economic growth, helped by market-cooling measures imposed by the authorities. Figures from Bank Indonesia showed that Indonesia’s residential property price index (14 major cities) rose by 7.88% during the year to end-Q2 2014, but this is a significant slowdown on 12.11% year-on-year price increases during the same period last year. When adjusted for inflation, property prices rose during the past year by just 1.19%. DBS Group Research believes that the sector has not peaked. It is only at the mid-cycle slowdown for following reasons: 1) structural demand (from huge housing backlog) remains, 2) Jakarta property remains one of the most affordable in the region, 3) low mortgage to GDP ratio despite rapidly growing mortgage loans, and 4) minimal infrastructure development across the country. The growth spurt in the property sector was mostly driven by the longstanding housing backlog problem, and Indonesia’s growing middle-income population. Households earning more than USD7,500 p.a. grew at 27% CAGR from 2009 to 2013 to reach 40% of total households; this is staggering compared to only 17% in 2009.

What is your opinion of property prices for the next 6 months

83%

Prices will increase 8%

Prices will stay the same

Unsure

Prices will go down 0%

20%

40%

60%

80%

100%

More than half of respondents (53%) have enough to cover all their expenses. Besides pressure from the fuel price hike, the increase in the provincial monthly minimum wage (UMP) would also exert upward pressure on developers’ cost of goods sold and operating expenses. Based on news flow over the past few weeks, 29 out of 33 provinces have capped the increase in UMP at 15%, a level considered reasonable so as not to shock the system (i.e. property development sector). Note that Jakarta’s monthly UMP will rise by 11% to IDR2.7m, while the UMP elsewhere would be between 19% and 54% lower than Jakarta’s, according to DBS Group Research. The Group also expects transaction volume to drop again this year (as witnessed last year) for two reasons: 1) current high property price/income ratio would discount buyers’ ability to purchase property, and 2) the steep drop in the gap between expected capital gains from an owned property, and deposit rates.

Is your current household income enough for all your expenses, including debt payments?

10%

Unsure

37%

53%

Yes 0%

10%

20%

30%

40%

50%

60%

The top three motivations for purchasing property are exactly the same as the previous survey: 1. Want to own their own house 2. For long-term investment / increase assets 3. Want to own a house in a better area Motivation for purchasing property 70% 60% 50% 40% 30% 20% 10% 0%

63% 45%

6% 8% 1% 1% 3%

11% 11% 14% 14% 15%

21% 23% 24%

Houses are the perennial favourite amongst respondents for the past two surveys. This time around, it is no different as 77% of respondents are interested in houses. Based on a Colliers 2Q 2014 Jakarta property report, the take up rate of residential apartments in Jakarta as a whole is currently at about 85% while the take up rate of residential apartments within the Jakarta CBD areas is at about 95%. Type of Propety interested in

Land

77%

House Kiosk/ Shop

Boarding House

Private Condominiums

Villa

Flat / Walk up apartments

1% 0%

10% 20% 30% 40% 50% 60% 70% 80%

Jakarta is a hot favourite amongst respondents. The first two picks, at a tie, are the Special Capital Region of Jakarta (DKI Jakarta) and West Java. This is followed by East Java and Central Java. Which area would you like to purchase your preferred type of property? 25% 23%

25% 20% 15% 10% 5%

3% 3% 1% 1% 1% 1% 1% 1% 1% 2% 2%

11% 8% 7%

71% of respondents would have a budget of less than IDR500 million for their preferred type of property. With land becoming scarce (and expensive) in Indonesiaâ&#x20AC;&#x2122;s capital city of Jakarta, vertical infrastructure is the most efficient and lucrative strategy to engage in property business. Most of the new apartments that are currently under construction target Jakartaâ&#x20AC;&#x2122;s middle class segment that can afford to spend about IDR200 to 500 million (USD17,000 to 43,000) on an apartment. The main argument being that most new apartments (approximately 70%) are bought by end-users instead of speculative buyers. Data from Colliers International Indonesia indicate that in 2015 the number of new apartments in Jakarta will rise by 18.98% to 24,954 units from 20,889 units in 2014. However, this growth of new apartments is lower compared to the 38.63% point growth recorded in 2014. Slowing growth is caused by the slowing economy, higher interest rates and uncertainties brought about by the legislative and presidential elections that were held in 2014.

Budget to Purchase Above IDR 4 million

IDR2 millon - IDR 3.5 million

2% 6%

IDR 1billion - IDR2 billion

20%

IDR500,000,001 - IDR 1billion

71%

Less than IDR500,000,000 0%

20%

40%

60%

80%

The five most important information that respondents seek to help in their decisionmaking process are: 1. Detailed information, including facilities 2. Price comparison 3. Quality photos 4. Facilities in area 5. Articles and news in specific region Information in property advertisement/listing that helps in decision-making 80% 70% 60% 50% 40% 30% 20% 10% 0%

72% 60%

10% 4% 8%

16%17%18%20%20%21%

31%32%33%

37%

45%

OVERSEAS PROPERTY: GENERALLY UNINTERESTED. HOWEVER, THOSE WHO PURCHASED CHOSE SINGAPORE. Majority of respondents do not own overseas properties. Own any properties overseas

Yes No 98%

Those who own properties overseas have retained interested in Singapore, while the United States have received much more attention this time around and Australia lost its attractiveness, compared to the previous survey.

In which Country they want to purchase 48%

Singapore USA

13%

Malaysia

13% 11%

Australia 5%

New Zealand Hong Kong

China

Great Britain

3% 0%

10%

20%

30%

40%

50%

The selected answers are almost of equal percentages. 38% of respondents engaged with property agents overseas and 33% purchased at property exhibitions in Indonesia respectively, while 29% used property agents in Indonesia.

How did you complete the purchase?

Used a local agent from country of origin to purchase

29%

Purchased via developer show/seminar/exhibition in your country of origin

33%

Contacted agent online from the country where the property is located

38%

10%

20%

30%

40%

80% of respondents (up from 60% in the previous survey) are not looking to purchase properties overseas.

Considering Investing In An Overseas Property

80%

11%

Undecided

Yes

20%

40%

60%

80%

For those who are considering overseas property, 54% of respondents would only be interested at least 2 years from now.

When do you intend to buy an overseas property?

54%

At least 2 years or more from now 38%

No plan

6 - 12 months from now

Within the next 6 months

4% 0%

10%

20%

30%

40%

50%

60%

The top reasons overseas property are attractive to respondents are: 1. Good investment 2. Potential capital appreciation 3. For holidays

Why is property in that location attractive to you 50% 40% 30% 20% 10% 0%

45%

49%

35% 25% 6%

13% 13%

Respondentsâ&#x20AC;&#x2122; budget for overseas property would spend less compared to the previous survey. 49% of respondents would spend less than IDR1.5 billion. Budget for overseas property

IDR 10 miliar and above

IDR 5 miliar - IDR 10 miliar

14%

IDR 3 miliar - IDR 5 miliar

24%

IDR 1,5 miliar - IDR 3 Miliar

49%

Less than IDR1,5 miliar 0%

10%

20%

30%

40%

50%

The preference for overseas properties has changed, where most respondents in this survey would prefer houses.

1 2 3

This survey House Condominium Flat / Apartment without lift

Previous survey Apartment House Condominium

What type of property would you purchase overseas? 38%

Terrace house Private condominium / serviced apartment

21%

Flat / walk-up apartment

21% 9%

Semi-detached house SOHO

Factory / industrial property

Hotel / Resort

Retail Space

2% 0% 5% 10% 15% 20% 25% 30% 35% 40%

The main source of property information is consistent with local property information search. Websites / online search engine is favoured, while exhibitions are preferred over references from friends and family. Source Of Information For Overseas Property 68%

Rumah123.com

61%

Other web portals (Google, Yahoo, etc)

37% Refer to family members and friends

31% 26%

Newspapers / magazines

24% 0% 10% 20% 30% 40% 50% 60% 70%

SENTIMENTS: A LARGE PERCENTAGE THINK THAT URBANITES SHOULD LIVE IN FLATS/APARTMENTS, WHILE MANY ARE UNAWARE OF THE GOVERNMENTâ&#x20AC;&#x2122;S EFFORT IN PROVIDING LOW-COST HOUSING 40% of respondents opine that the Government has taken the reigns of the national housing crisis. Real Estat Indonesia (REI) said that if the central bank of Indonesia (Bank Indonesia) raises its BI rate further (which is highly likely ahead of higher US interest rates in the second or third quarter of 2015), growth in the domestic property sector will decline further. Particularly, the lower income households will feel the impact of declining purchasing power. Considering that the country still needs to address a backlog of about 15 million houses, property prices may not easily drop due to continued strong demand. Ministry of Housing (Kemenpera) states that it is not able to solve the problem of the housing backlog on its own, because it needs an active role in the local government permits and spatial establishment, developers to increase construction activity at an affordable price as well as the community itself to build decent housing independently. In relation to housing programmes on the new Indonesian government, Kemenpera is optimistic that President-elect Joko Widodo will encourage housing programme because housing is one of the basic needs that must be met. Agree that the Government has taken ownership of handling the national housing crisis (housing backlog) seriously?

21%

No comment

40%

39%

Yes 0%

10%

20%

30%

40%

66% of respondents feel that the Ministry of Housing should still be maintained. Do you think the Ministry of Housing should still be maintained?

21%

No Comment

13%

66%

Yes 0%

10%

20%

30%

40%

50%

60%

70%

Half of respondents agree with Indonesian President Jokowi on combining Ministry of Public Works and Ministry of Housing. Public Works and Public Housing Minister Basuki Hadimuljono said the ministry would set aside IDR700 billion (USD55.5 million) in the revised state budget to build housing in the border areas this year. Basuki said the government would build at least 8,000 units of accommodation this year, Including 36-square-meter landed houses and twin blocks in the country's border areas, Including in West Kalimantan, East Nusa Tenggara and Papua. In total, the ministry will allocate IDR2.7 trillion this year to improve the accessibility and quality infrastructure in the border areas, Including roads and immigration facilities. Agree with the Governmentâ&#x20AC;&#x2122;s decision to combine Ministry of Public Works and the Ministry of Housing

18%

No comment

33%

49%

Yes 0%

10%

20%

30%

40%

50%

The respondents are split right in the middle when it comes to knowing about Ministry of Housing’s budget to help the less fortunate. Did you know that in the last 10 years the Ministry of Housing had a budget to help those less fortunate in the form of aid or subsidised housing finance

49%

51%

Majority of respondents (80%) are unaware that the budget for Housing Loan Liquidity Facility reached USD4.49 billion in 2013 and 2014. The new government is set to prioritise the construction of cheap and subsidised housing to tackle skyrocketing house prices. Specifically, it is being reported that the new government will try and construct more low-cost apartments to increase the supply of housing for low-income residents. “Building homes for low-income residents will be a crucial move as it can gradually alleviate slums and, at the same time, tackle the issue of homelessness,” said Enggartiasto Lukita, the Jokowi-Kalla transition team’s head of housing and property division. Enggartiasto said house supply and demand must be improved through methods including making use of abandoned land owned by the government and state-owned enterprises, as well as driving up demand through the housing loan liquidity facility (FLPP). Did you know that the state budget in 2013 and 2014 to help the community in the form of Housing Loan Liquidity Facility (FLPP) reached USD4.49 billion, equivalent to the amount of 57,792 housing units

20% Yes 80%

58% of respondents feel that the budget allocation to reduce national housing crisis has been ineffective.

Do you think that the budget allocation to reduce the national housing crisis has been effective

58%

42%

Yes

10%

20%

30%

40%

50%

60%

61% of respondents think that the Housing Loan Liquidity Facility should be continued under Jokowi. Public Works and Public Housing Minister Hadimuljono Basuki said that the country planned to build around 13 million houses for low-income families nationwide. To realize that plan, the Government aims to build 2 million houses per year, allocating IDR10 trillion in the revised 2015 state budget to finance the program. According to Basuki, the allocated state budget would not only be used to construct the residences but also to fund the housing loan liquidity facility (FLPP) that was Introduced in 2012 to help low-income people in acquiring houses.

Should Housing Loan Liquidity Facility (FLPP) be continued under Jokowiâ&#x20AC;&#x2122;s Government

61%

Yes

31%

Undecided

No 0%

10%

20%

30%

40%

50%

60%

70%

Majority of respondents (67%) think that urban folks should live in flats/apartments. A World Bank study in 2012 confirmed that the majority of Indonesia’s population 51% lived in urban areas, a central trigger of which was ongoing urbanisation. The country’s urbanisation rate also showed that Indonesia had the most rapid growth compared to other countries in Asia. Such growth was expected to continue. The World Bank predicted that by 2025, 68% of Indonesia’s population would live in urban areas. From 1993 to 2007, the World Bank recorded an average annual rate of urbanisation in Indonesia of 4.2%. Association of Indonesian Housing Development (APERSI) head, Ari Tri Priyono, said it was getting more difficult for developers to build subsidised and affordable housing in the Greater Jakarta area, due to rising land prices and the difficulty of acquiring the land itself. Just like any urban areas, it will be a matter of time when land runds out in urban areas and living in high rise buildings will become a norm.

Do you think that it’s time for Indonesians, especially those living in ubran areas, to live in a flat / apartment?

33%

67%

Yes

10%

20%

30%

40%

50%

60%

70%

81% of respondents agree with the encouragement of living in flats due to space restrictions and increasingly bad traffic.

Do you agree if the Government encourages urbanites to live in flats to overcome limitation of space and traffic that is getting worse

19%

81%

Yes

20%

40%

60%

80%

100%

69% of respondents think that there is still place in the city center for affordable housing.

Do you think that there is still space in the city center or other strategic locations for the Government to build flats for those who with affordability issues

31%

69%

Yes

10%

20%

30%

40%

50%

60%

70%

Most respondents would take a loan from banks. 75% of respondents are open to credit facilities. The top two deciding factors would be mortgage interest rates and ease of credit applications.

If you plan to purchase property, would you take a loan from the bank

25%

75%

Yes

20%

40%

60%

80%

What is the most influential factor in determining your choice for credit provision for your property?

64%

Mortgage Interest Rates 29%

Ease of credit application 4%

Customer Service

Cashback 0%

10%

20%

30%

40%

50%

60%

70%

73% of respondents think that the Government should pick who is entitled to own or rent a flat.

Do you think that the Government should decide who is entitled to own or rent a flat?

Undecided

18%

73%

Yes 0%

20%

40%

60%

80%

Most respondents (81%) are unaware of the 1,000-Tower programme. In 2007, then-vice president Jusuf Kalla said Indonesia would build 1,000 apartment towers for low-income citizens by 2011, raising hopes that people living in slums and on river banks in cities like Jakarta would finally have a decent place to call home. But five years later, only about 100 of the towers have been built, mostly in Jakarta. Units were bought by more-affluent residents because most poor people had difficulty securing bank loans, according to industry observers

During the reign of SBY-JK from 2004 to 2009, there is a 1,000-Tower programme. Did you know about this programme?

19%

Yes 81%

53% of respondents think that developers doubling up as mortgage loan providers are a plus point.

Do you agree that developers made a breakthrough by providing services as an alternative mortgage loan provider, despite offering a shorter credit duration and higher interest rates?

11%

Undecided

36%

53%

Yes 0%

10%

20%

30%

40%

50%

60%

Respondents are split when it comes to the issue of property bubble. 36% of respondents believe that the market has been affected, while another 37% think otherwise. After studying the indicators, DBS Group Research concluded that Indonesia’s property sector is not in bubble territory. At the same time, they do not expect 2015 to be a breakout year. In a new report entitled, “When the going gets tough”, they outlined some of the challenges ahead due to expected cost pressures, including the recent price hike for subsidised fuel. There could also been pressure possible further economic tightening as well as sentiment risk towards the country in general. With the expected slowdown in Indonesia’s economy this year, they expect minimal growth in marketing sales. A steady decline in pre-sold units will continue to offset the impact of higher land prices at all property development segments. Do you think that Indonesia is affected by a property bubble?

37%

36%

Yes

27%

Undecided 0%

10%

20%

30%

40%

Slightly more than half of respondents (54%) feel that 10% is a fair percentage for a downpayment.

In your opinion, how much downpayment should be required for a mortgage?

10%

Prefer not to comment

15%

30%

21%

20%

54%

10% 0%

10%

20%

30%

40%

50%

60%

HONG KONG: HIGH MARKET SENTIMENT DESPITE THREATS OF PRICE CORRECTION IN THE RESIDENTIAL PROPERTY MARKET Despite the various cooling measures introduced since 2012, Hong Kong’s residential property market has risen relentlessly the last four years. According to the Ratings and Valuation Department (RVD), house prices have risen by 4.28% year-on-year to end July 2014, a stark contrast to the 18.92% year on year increase in July 2013. Property sales have been booming. Just this August, sales rose 82.33% y-o-y to 6,212. Property prices in Hong Kong have surged 117.2% (89.5% inflation-adjusted) from December 2008 to December 2012, driven higher by a flood of money from developed markets´ central banks in the wake of the global financial crisis. In 2009, while property prices were taking a nosedive across the U.S., Hong Kong’s housing market was going into overdrive. 

In 2009, property prices rose by 28.5% (26.6% inflation-adjusted)



In 2010, house prices rose by 21% (17.6% inflation-adjusted)



In 2011, house prices rose by 11.1% (5.1% inflation-adjusted)



In 2012, property prices rose by 25.7% (21.2% inflation-adjusted)

Hong Kong’s property market has become the world’s most unaffordable, according to a Demographic International Housing Affordability Survey, published in January. Average home prices were 14.9 times gross annual median household income, the highest level ever recorded in the survey´s 10-year history. Demand has been propelled by a combination of stringent government regulations on development, low interest rates, and currency stability; while the supply of land, which the government controls, continues to diminish. Hong Kong has introduced a string of measures to curb residential property prices: 

In November 2010, the government imposed a ´flip tax´ of 15% on properties resold within six months, and doubled stamp duties to 8.5% on properties worth HK$20 million (US$2.6 million) or more.



On October 26, 2012, the government introduced a Buyer’s Stamp Duty (BSD), imposing a 15% tax on property purchases made by foreigners.



In February 2013, the government doubled the stamp duty on all property transactions worth more than HK$2 million (US$257,902), though this measure ended in May 2014. 88



The slight increase in prices mainly comes from strong pent-up demand from end-users exempt from the cooling measures. The luxury market, on the other hand, has lost momentum in the absence of external demand from investors and wealthy mainlanders affected by the government´s measures. Foreign buyers and investors buying through companies account for only 4% of transactions over the past two months, according to data from Inland Revenue´s Buyers Stamp duty receipts. Unsurprisingly, smaller-sized residential properties have experienced the highest growth in prices. During the year to July 2014, the average price of apartments smaller than 40 sq. m. rose by 5.4% and by 3.8% for 40-70 sq. m. apartments. Meanwhile, average prices grew by a miniscule 0.7% for 70-100 sq. m. apartments, 0.5% for 100-160 sq. m. apartments and declined 1.9% for apartments larger than 160 sq. m.

DEMOGRAPHICS: EXPECTS THAT INTEREST RATES WILL NOT RISE IN THE FIRST HALF OF 2015 AND THAT A RISE WILL NOT HINDER THEIR PROPERTY PURCHASING PLAN In comparison with H2 of 2014, there is a significant decrease in female respondents (60% to 38%), while there was an increase in the number of male respondents (40% to 62%). Gender

38% Male

62%

Female

There is a significant decrease in the number of married respondents compared to the last survey findings 60% to 53%. Marital Status

44%

Single 34%

Married, with children 19%

Married, no children 3%

Others 0%

10%

20%

30%

40%

50%

The results show that more than half of respondents (52%) have more than 2 people in their household. 29% of respondents have more than four members in their household.

No of people in a household 8%

5 or above

21%

23%

26%

2 22%

1 0%

10%

15%

20%

25%

30%

There are more permanent residents in this survey compared to citizens. Residency Status

51%

Permanent Resident 45%

Citizen 3%

Foreigner residing in the country

Non-resident in the country 0%

10%

20%

30%

40%

50%

60%

36% of respondents are from the Hong Kong Island, while 35% are from New Territories. 26% are from Kowloon. Currently Residing in 36%

Hong Kong Island

35%

New Territories 26%

Kowloon 2%

Outlying Islands Oversea

China

1% 0%

10%

15%

20%

25%

30%

35%

40%

Professionals/Technicians continue to remain the largest occupation group represented. There is an equal split in respondents being in clerical/administrative and homemakers. Occupation 21% 19% 19%

Professional／Technician Clerical／Administrative Homemaker Executive／Managerial Self-employed Sales Civil Servant Retired CEO／Senior Management Unemployed Other (please specify) Student

14%

7% 6%

4% 4%

2% 1% 1% 0%

10%

15%

20%

25%

Majority of respondents were between the ages of 35 – 39 years old, an increase compared to findings in the H2 of 2014 (23% to 30%) Age Group 16%

50 or above 10%

45-49

14%

40-44

30%

35-39 16%

30-34 11%

25-29 3%

20-24 1%

19 or below 0%

10%

15%

20%

25%

30%

35%

There is a decrease in the number of respondents reporting a monthly personal income between HKD$15,000 – HKD$40,000 (58% to 45%), while 27% reported a monthly income of between HKD$40,001 – HKD$60,000, also an increase compared to the last survey. Only 7% had a monthly income of HKD$80,000 and above, an increase compared to findings in H2 (5%). Monthly Personal Income 7%

HKD 80,000 above 4%

HKD 60,001 - HKD 80,000

27%

HKD 40,001 - HKD 60,000 22%

HKD 25,001 - HKD 40,000

23%

HKD 15,000 - HKD 25,000 17%

Below HKD 15,000 0%

10%

15%

20%

25%

30%

There was a slight decrease in the number of respondents who considered themselves first time home buyers (22% to 13%) and property buyer (18% to 14%) compared to findings in H2. Respondents who considered themselves tenants have increased (33% to 39%). In this survey finding, 30% of respondents considered themselves property owners, a slight decrease from H2 (34%). Consider Themselves 39%

Tenant 30%

Property Owner 14%

Property Buyer

13%

First Time Property Buyer 10%

Investor 4%

Property Seller

Expatriate

Real Estate Professional 0%

10% 15% 20% 25% 30% 35% 40%

51% of respondents described that the share their financial decisions with their spouse, partner or someone in their household. Best describes how financial decisions are made in your household I share financial decisions with my spouse, partner or someone else in my household

51% 40%

I make all financial decisions myself My spouse or someone else in my household makes all financial decisions

I consult a financial planner

Other (please specify)

1% 0%

10% 20% 30% 40% 50% 60%

52% of respondents reported owning no property while 30% reported owning at least one and 12% owning two. Only 7% reported owning three or more properties. No of properties owned 2%

5 or above

12%

30%

52%

None 0%

10%

20%

30%

40%

50%

60%

Those that own a property, 96% own residential property. Types of properties owned

Land

Shop/Commercial Building

12%

Car park

96%

Residential property 0%

20%

40%

60%

80%

100%

62% of respondents live in private housing. Slightly more than half (52%) have lived in their current premises for less than 5 years. This seems to be a common trend with respondents in the other countries as well. When it came to status of the property lived in, 30% reported renting it while 28% owns the property they live in now. Type of property lived in 62%

Private Housing 15%

Public Housing

10%

Apartments under Home Ownershipâ&#x20AC;Ś Serviced Apartment

Village House

5% 1%

Other (please specify)

0% 10% 20% 30% 40% 50% 60% 70%

Years Lived in Current Premises

All my life

24%

11- 20years

20%

6-10years

52%

0 -5 years 0%

10%

20%

30%

40%

50%

60%

Status of property lived in 30%

Rental

28%

Self-owned Self-owned (mortgaged)

15%

Public Housing

14% 13%

Apartments under Home Ownershipâ&#x20AC;Ś 0%

10% 15% 20% 25% 30%

49% of respondents are looking to purchase both new property and second hand property. 63% want to purchase private housing while 11% want to purchase serviced apartments. What type of residential property are you currently considering purchasing?

49%

Both new property and second-hand property 33%

Second- hand property 18%

New property 0%

10%

20%

30%

40%

50%

Type of property interested in 63%

Private Housing 11%

Serviced Apartment

Village House

Public Housing Apartments under Home Ownershipâ&#x20AC;Ś

Hotel/ Resort

Home Office

Other (please specify)

1% 0% 10% 20% 30% 40% 50% 60% 70%

GoHome.com.hk is the main source of information that respondents turn to get news and information on property in the country. How do you usually obtain news and information on property in the country 70%

GoHome.com.hk Talk to property agents Directly from developers Print Ads Online – Search engines Refer to family and friends TV/radio Property Exhibitions SMS Ads

56% 51% 42% 41% 21% 20% 17% 8% 0%

10% 20% 30% 40% 50% 60% 70% 80%

When it came to obtaining information on new property launches and developments in the country, 58% of respondents also turned to GoHome.com.hk compared to any other medium. Obtain Information On New Property Launches/Developments In The Country GoHome.com.hk Newspapers/magazines Online – Search Engines (Google,… Property Exhibitions TV/ Radio GoHome Mobile App Refer to family members and friends Direct Mailers from Developers/Agents Other (please specify) 0%

58% 43% 37% 33% 21% 15% 12% 12% 1% 10% 20% 30% 40% 50% 60%

The top three information that respondents want to see when searching for property related information and news is detailed property information, property photos and property prices comparison. Which of the following information will help you to browse property websites for property purchasing decision? Detailed property information Property photos Property prices comparison Property transaction data Property facilities information Property features comparison Estate ratings Mortgage calculator Mortgage analysis Property video Mortgage information Interactive map Agentâ&#x20AC;&#x2122;s contact Other (please specify)

64%

44%

26% 25% 23% 20% 19% 18% 14% 10% 10%

20%

30%

40%

52%

58%

50%

60%

70%

47% of respondents are looking to purchase property in 1 to 2 years from now. When do you intend to buy a property?

12%

At least 2 years or more from now

47%

1 â&#x20AC;&#x201C; 2 years from now 30%

6 â&#x20AC;&#x201C; 12 months from now 11%

Within the next 6 months 0%

10%

20%

30%

40%

50%

73% of respondents did not purchase nor sell property in the last two years. Did you sell or purchase any residential properties within the past 2 years?

73%

None of the above 8%

Yes, sell and purchase

12%

Yes, purchase 7%

Yes, sell 0%

20%

40%

60%

80%

70% of respondents are considering selling or purchasing a residential property in the first half of 2015. Would you consider to sell or purchase a residential property in the first half of 2015?

70%

None of the above 18%

Yes, Purchase 8%

Yes, Sell and Purchase 4%

Yes, Sell 0%

10%

20%

30%

40%

50%

60%

70%

100

Those that were intending to sell, 50% of respondents stated that their main reason to do so was because the property was at a good price. 34% wanted to transfer the capital to other investment items. What are your reason(s) for selling your residential property is/are?

Other

Transfer the capital to other investment items

34% 50%

Selling the apartment at a good price 36%

Moving to a better place 0%

10%

20%

30%

40%

50%

Respondents that were intending to purchase said that their main reason to consider purchasing a residential property now, 58% said it was for their own use. What is your reason for considering purchasing a residential property now?

44%

Investment use

22%

Family use

58%

Own use 0%

10%

20%

30%

40%

50%

60%

101

For those that were not interested to purchase a property, the top three reasons given were: 1. Property prices are too high 2. Unable to find a property they can afford 3. Not having enough down payment to purchase If you are not interested to purchase a property at the moment, which of the following factors are hindering you from doing so? Property prices are too high Cannot find a property that I can afford Not having enough money for a down payment Unpredictable property market Prefer to rent as it is cheaper than paying a loan Don’t consider property a good investment… Banks making it too hard to qualify for a home… Lack of good financing options Even with the housing schemes introduced by… Having too much debt from college and…

87% 62% 39% 33% 30% 17% 17% 9% 5% 2% 20%

40%

60%

80%

100%

69% of respondents were looking at selling their property between HKD$3 to HKD$10 million. Property of what price range are you considering to selling? Above 50 million

30 – 50 million

3% 19%

10 – 30 million

35%

5 – 10 million

34%

3 – 5 million 7%

Below 3 million 0%

10%

20%

30%

40%

102

When asked if they would adjust their asking price, 34% said they will increase the property price by 10% below. How will you adjust your property asking price when selling your residential property? 1%

Yes, will decrease 11% - 20%

13%

Yes, will decrease 10% below Yes, will increase 41% or above

4% 3%

Yes, will increase 31% - 40%

Yes, will increase 21% - 30%

11%

Yes, will increase 11% - 20%

34%

Yes, will increase 10% below

27%

No adjustment

10%

15%

20%

25%

30%

35%

78% stated that the ‘umbrella movement’ did not affect their asking price. Did the “Umbrella Movement” affect the asking price which you have mentioned?

22%

Yes 78%

103

59% of respondents stated that should the mortgage rate increase, it would not affect their decision to sell their property now. If the mortgage rate is increased, would it affect your decision to sell your property now?

41% No

59% Yes

10%

20%

30%

40%

50%

60%

When asked if their current household income was sufficient to meet their expenses, including any payments on debt and mortgages, 66% of respondents said that it was. Do you feel that your current household income is sufficient for the amount of expenses you have, including any payments on debt and mortgages?

11%

Donâ&#x20AC;&#x2122;t know

23%

66%

Yes 0%

10%

20%

30%

40%

50%

60%

70%

104

This is the first time in history that the political environment becomes a major factor affecting market decisions on buying and selling of properties (nearly 50 percent); followed by mounting inflation (45%). External factors, such as the US delisting plan, the economic development of China, so on and so forth are all main factors influencing the decision to enter the market (accounting for over 40% of respondents). What important factors do you take into account when considering sell or purchase a residential property? 50%

Political factor

45% 41%

Inflation External factors (such as U.S. andâ&#x20AC;Ś 28% 26%

Bank mortgage rates change Mortgage burden ratio

22%

Government measures for propertyâ&#x20AC;Ś 16%

Individual factors (such as stable jobs,â&#x20AC;Ś 1%

Other (please specify) 0%

10%

20%

30%

40%

50%

What are the major obstacles do you face in trying to get a home loan? 3%

Other (please specify)

18%

Affording a down payment

16%

The economy/interest rates 0%

Personal debt

26%

Insufficient income/salary

37%

Qualifying/getting approved 0%

10%

20%

30%

40%

105

OVERSEAS PROPERTY: INVESTORS ARE EXTENDING TO OVERSEAS MARKETS â&#x20AC;&#x201C; AUSTRALIA, JAPAN AND UNITED KINGDOM PROPERTIES ARE THE NEXT NEW WAVES 86% of respondents currently do not own any property overseas. Only 14% do.

Own Property Overseas

14%

Yes No 86%

The 14% that have property overseas have purchased the property in China (46%), UK (17%) and 13% in the Australia

In which country did you purchase this property? 46%

China Other (please specify) U.K. Australia U.S. Malaysia Thailand Singapore Macau Japan Indonesia

22% 17% 13% 9% 5% 4% 3% 3% 2% 2% 0%

10%

20%

30%

40%

50%

106

28% have used other methods aside from using a local agent from their country of origin to purchase or via the developer directly.

How did you complete the purchase?

28%

Other (please specify) Used a local agent from country of origin to purchase

26%

Purchased via developer show/seminar/exhibition in yourâ&#x20AC;Ś

25%

Contacted agent online from the country where the property is located

21% 0%

10% 15% 20% 25% 30%

The government launched the BSD (Buyers Stamp Duty), DSD (Double Stamp Duty) and SSD (Special Stamp Duty) previously, which has driven more and more investors to move to mainland China or to overseas property markets. Interest in overseas property investment has increased compared to H2 of 2014. The survey showed that 23% of respondents want to purchase overseas properties compared to last survey (23%).

Considering to purchase property overseas or China property

23%

Yes 77%

107

The vast majority of overseas properties sought last year mainly focused around the Southeast Asia region, including China, Singapore, Malaysia and Indonesia. However, more and more oversea property exhibitions are held in Hong Kong, investors have switched their attention to Australia, Japan, United Kingdom and other European counties. The survey results shown that overseas markets, like Australia, are becoming more popular and has been voted as the second most worthwhile country to invest in after China. Meanwhile, the British property market ranked third. Prefered overseas country China Australia Japan U.K. U.S. Singapore Thailand Otherâ&#x20AC;Ś Malaysia Macau Indonesia

31% 31% 30% 29% 20% 17% 15% 12% 12% 9% 3% 5%

10%

15%

20%

25%

30%

35%

Properties in mainland China also have their supporters. The most popular Chinese cities are other parts of China that is not listed below (29%), Shenzhen (27%), Shanghai (21%) and Guangzhou (14%).

Which China cities are you interested in buying properties in 29%

Other (please specify) Shenzhen Shanghai Guangzhou Zhuhai Beijing Zhongshan Dongguan Foshan

27% 21% 14% 11% 10% 6% 4% 2% 0%

10%

15%

20%

25%

30%

108

61% have a budget of between Below HKD$1 million to HKD$3 million. What price range are you considering purchasing in the aforementioned country 1%

Above HKD 50 million

HKD 30 – HKD 50 million

HKD 10 – HKD 30 million

11%

HKD 5 – HKD 10 million

21%

HKD 3 – HKD 5 million

38%

HKD 1 – HKD 3 million 23%

Below HKD 1 million 0%

10%

20%

30%

40%

40% of respondents are interested in purchasing a flat/walk-up apartment followed by semi-detached houses (22%) and private condominiums/serviced apartments (16%) Type of Property Interested in 40%

Flat / walk-up apartment Semi-detached house Private condominium / serviced apartment Bungalow Retail space Terrace house Hotel / resort Other (please specify) Shop office SOHO Factory / industrial property

22% 16% 6% 5% 4% 3% 2% 1% 1% 0% 0%

10%

20%

30%

40%

50%

109

33% are planning on purchasing property there in 1 to 2 years from now, while 25% plan to do so in at least 2 years or more.

When to purchase 26%

No plan

25%

At least 2 years or more from now

33%

1 to 2 years from now 12%

6 to 12 months from now 4%

Within the next 6 months 0%

5% 10% 15% 20% 25% 30% 35%

48% of respondents indicate they would consider overseas real estate investment due to it being a good investment. Another 43% of respondents expressed that the potential yield is higher, while 34% expressed the desire to migrate to, or enjoy their retirement in an overseas market. Why is the property in that country attractive 48%

It is a good investment 43%

The potential yield is high 34%

I expect to migrate or retire to that… 22%

For vacation / residential purpose

19%

The economic slowdown in that…

19%

The exchange rate works in my favor

13%

For my children study aboard / in…

12%

The country has housing policies that… 2%

Other (please specify) 0%

10%

20%

30%

40%

50%

110

Online is the preferred platform used by respondents to also search for properties overseas, with GoHome.com.hk being the favourite. How they search for property overseas 50%

GoHome.com.hk Other web portals (Google, Yahoo, etc)

38%

Newspapers/magazines

37% 30%

Talk to real estate professionals /â&#x20AC;Ś

27%

Attend exhibitions that featureâ&#x20AC;Ś 20%

Refer to family members and friends 12%

GoHome Mobile App 2%

Other (please specify) 0%

10%

20%

30%

40%

50%

111

SENTIMENTS: CAUTIOUSLY OPTIMISTIC ABOUT THE PROPERTY MARKET AND ARE EXPECTING A LESS THAN 10% INCREASE IN PROPERTY PRICES IN THE FIRST HALF OF 2015 With approximately 66% of respondents are looking for and interested in buying a residential property with HK$5 million or less. However, most available properties are priced between HKD$5 million to HKD$10 million, which implies a shortage of secondhand starter homes. Property prices of starter home continue to rise and about 75% of respondents think that the current price for starter homes is too high. View on the current property prices in Hong Kong

75%

Prices are too high

20%

Prices are reasonable

Prices are too low 0%

20%

40%

60%

80%

112

29% predict that the property prices will increase by 5%, while 26% believe that property prices will increase between 6% - 10%. Prediction For Overall Hong Kong Property Prices In The First Half Of 2015 Property prices will decrease 16% orâ&#x20AC;Ś Property prices will decrease 11% - 15% Property prices will decrease 6% - 10% Property prices will decrease 5% Property prices will increase 16% orâ&#x20AC;Ś Property prices will increase 11% - 15% Property prices will increase 6% - 10% Property prices will increase 5% Property prices will remain the same 0%

2% 2% 5% 8% 3% 5% 26% 29% 20% 5%

10% 15% 20% 25% 30%

Even while the government is making effort to increase land supply and the developers are increasing the availability of first-hand property in recent years, 71% of respondents believe that there is insufficient housing supply to meet the huge demand in the first half year. Believe the residential flat supply in the first half of 2015 is adequate

29%

Yes 71%

113

Although the “Umbrella Movement” had lasted for more than two months since September 2014, caused traffic congestion in main urban areas, 79% of respondents believe that it has no impact on the property market. The “Umbrella Movement” may affect the business of some restaurants and shops nearby the occupation area, also bringing traffic to a halt. Do you think it bringing any effect on the property market?

21% Yes 79%

114

17% of the total respondents consider the “Umbrella Movement” has an impact on the new property market, 49% of them believe the movement has led to a decline of 5% or less in new property sales volume.

Do you think “Umbrella Movement” affect the volume of property transaction in Hong Kong?

73%

No Affecting both new property and second-hand property sales

12%

Affecting the second-hand property sales

10% 5%

Affecting the new property sales 0%

20%

40%

60%

80%

How does the “Umbrella Movement” affect the new property sales in Hong Kong? Decrease 16% or above

Decrease 11% - 15%

4% 17%

Decrease 6% - 10%

49%

Decrease 5% 2%

Increase 16% or above

10% 8%

Increase 11% - 15% Increase 6% - 10%

13%

Increase 5% 0%

10%

20%

30%

40%

50%

115

22% of the total respondents consider the “Umbrella Movement” has an impact on the second-hand market, 47% of the, believe that it has led to a 5% or less decline in second-hand property transaction volume. Hence, the respondents generally consider the "Umbrella Movement” has a minimal impact on the property market.

How does the “Umbrella Movement” affect the secondhand property sales in Hong Kong? 7%

Decrease 16% or above

Decrease 11% - 15%

20%

Decrease 6% - 10%

47%

Decrease 5% or above 3%

Increase 16% or above Increase 11% - 15%

Increase 6% - 10%

4% 11%

Increase 5% or above 0%

10%

20%

30%

40%

50%

Nearly 65% of respondents anticipate that the bank will not raise interest rates in the first half of this year. Although nearly 60% of property owners said the increase of interest rates would affect their decision to sell their property. Do you think the mortgage rate would increase in first half of 2015?

35%

65%

Yes No

116

Over 50% of property buyers believe that a rise will not impact their decision to purchase new properties, reflecting how prospective buyers would still be inclined to make a purchase despite a rise in interest rate. Under the current uncertain property market environment, would you consider to shift the capital to other investment?

47% 53%

Yes No

117

SINGAPORE: SLOWDOWN EXPECTED AS COOLING MEASURES WORK ITS WAY THROUGH THE SYSTEM FURTHER According to government data, Singaporeâ&#x20AC;&#x2122;s homeownership rate is among the highest in the world. The figure for resident households was 90.5% in 2013, up from 58.8% in 1980. This was largely due to housing grants and a programme that allows buyers to use accumulated government pension contributions for purchases. In 2009, officials tightened lending by barring interest-only mortgages for some housing and forbidding developers from absorbing interest payments for units under construction. The government also taxed speculators and placed levies as high as 15% on foreign buyers. Home prices hit a record in September 2013. In 2013, the Government imposed additional cooling measures, while in 2014, the Government allowed those existing cooling measures work its way through the system. Result of cooling measures In the whole of 2014, property prices and volume have contracted. For the rest of 2015, some property analysts expect prices to slide further â&#x20AC;&#x201C; between 4.5% and 8%. Prices in the private property market have been dropping for 9 months and the total drop is approximately 3%. Duration 2013 Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4

URA PPPI 213.2 215.4 216.3 214.3 211.6 209.4 208.1 205.8

% Change 1.0% 0.4% -0.9% -1.3% -1.0% -0.6% -1.0%

118

The flash estimate of the 4th Quarter 2014 RPI using the revised method is 137.1, a decline of 1.4% over 3rd Quarter 2014. The previous RPI from 1Q1990 to 3Q2014 has been re-scaled to the new base period of 1Q2009, but the quarterly percentage changes remain unchanged, according to the Housing and Development Board (HDB). According to URA, prices of non-landed private residential properties have fallen across all market segments. Prices in the Core Central Region fell 0.9 per cent, prices in Outside Central Region fell 0.2%, and In Rest of Central Region, Prices of landed properties fell 1.1% compared to the 1.8% decline in the previous quarter. For the whole of 2014, prices of landed properties fell by 5.2%. URA added that the flash estimates are compiled based on transaction prices given in caveats lodged during the first ten weeks of the quarter, supplemented by survey data on new units sold by developers during that period. According to a new report by Savills, they predict that Singapore's private residential market is expected to remain soft in 2015 with primary launches holding prices better than those in the resale market. Rents are expected to continue to decline due to the slew of new completions and limited budgets amongst overseas nationals working here. Although yields are expected to compress further, prices may not react to this because the better driver of prices appear to be other economic factors like the unemployment rate which is still expected to remain low in 2015.

119

DEMOGRAPHICS: MARRIED HOMEOWNERS LOOKING TO PURCHASE IN THE NEXT 2 YEARS, WHILE EXPECTING PROPERTY PRICES TO DROP IN THE NEXT 6 MONTHS The percentages are similar to the previous survey â&#x20AC;&#x201C; with more male respondents at 51%. Gender

49% 51% Male Female

There has been a steady increase of married respondents, from 64% (H1 2014) to 71% (H2 2014) to 76% in this survey.

Marital Status

Other

52%

Married, with children 24%

Married, no children

23%

Single 0%

10%

20%

30%

40%

50%

60%

120

Approximately one third of respondents (34%) belong to the 31 â&#x20AC;&#x201C; 40 age bracket. Similar to the previous two surveys, those from 41 years old and above group accounts for 44% of respondents.

Age Group

20%

51 and above

24%

41 - 50 years old

34%

31 - 40 years old 18%

20 - 30 years old 3%

Below 20 0%

10%

15%

20%

25%

30%

35%

60% are Singaporean citizens, while 23% are permanent residents.

Residency Status

Non-resident in the country

12%

Foreigner residing in Singapore

23%

Permanent Resident

60%

Citizen 0%

10%

20%

30%

40%

50%

60%

121

The top 5 districts (in descending order) that respondents currently reside in are:  District 19 - Serangoon, Hougang, Punggol, Sengkang  District 23 - Bukit Panjang, Choa Chu Kang, Bukit Batok, Dairy Farm, Hillview  District 12 - Balestier, Serangoon, Toa Payoh  District 20 - Ang Mo Kio, Bishan, Braddell, Mei Hwan, Thomson  District 18 - Tampines, Pasir Ris, Simei There are more respondents from District 12 this time around (making an appearance in the third spot), while there is less from District 22 – Boon Lay, Lakeside, Jurong (which was in the fifth spot in the previous survey).

Currently reside in 35% 30% 25% 20% 15% 10% 5% 0%

The percentages are relatively the same. Most respondents (28%) are ‘Executives/Managers’, while 21% are ‘Professionals’ and 10% are ‘Self-Employed’. These percentages are almost the same as the previous survey.

Occupation 21%

Professional/ Technical Self Employed Clerical/ Administrative CEO/ Senior Management Civil Servant Sales Homemaker Retired Other Unemployed Student

10% 10% 8% 5% 5% 4% 3% 2% 2% 1% 0%

10%

15%

20%

25%

122

26% of respondents earn less than SGD60,000 per annum, while 5% of respondents earn above SGD240,001 per annum. Singapore’s resident labour force participation rate rose for the third consecutive year to a record 67%, the Ministry of Manpower (MOM) said in November 2014. As labour force participation rose, the employment rate of residents aged 25 to 64 reached a high of 79.7% in 2014, up from 79% in 2013 and 72.3% in 2004. Salaries were up as well, with the nominal median monthly income including employer CPF contributions rising by 1.8% from the year before to SGD3,770 in June 2014. However, the rate of growth slowed from June 2013's 6.5%. After adjusting for inflation, the real median income slowed to 0.4% in 2014, compared with 4% in 2013. According to MOM, income growth was higher than average in 2013, partly pulled up by the initial effect of the Wage Credit Scheme launched in 2013 which could have encouraged employers to give bigger wage increments.

Annual household income 8%

Prefer not to say Above S$240,001 S$180,001 – S$240,000 S$140,001 – S$180,000 S$120,001 – S$140,000 S$100,001 – S$120,000 S$80,001 – S$100,000 S$60,001 – S$80,000 S$40,001 – S$60,000 Below S$40,000

5% 6% 5% 6% 12% 16% 16% 16% 10% 0%

10% 12% 14% 16%

123

The results remain relatively unchanged from the last survey. 30% of respondents have 4 people in their household, while 21% have more than 4 in their homes. From the percentages recorded, respondents are likely to be families with kids and/or the elderly. How many people live in your household

21%

More than 4

30%

4 25%

3 18%

2 6%

1 0%

10%

15%

20%

25%

30%

The respondents are largely made up of those interested in buying property (32%), monitoring the market (29%) and first-time homebuyers (12%). The respondents are largely property buyers.

Which best describes you 32%

interested in buying property

29%

Just monitoring the market

12%

First time home buyer

10%

interested in selling property Real Estate professional / property agent

Looking to rent out a property

interested in leasing and renting property

5% 2%

Expatriate

5% 10% 15% 20% 25% 30% 35%

124

51% own a property, while 24% own two properties. Thus, it can be deduced that homeowners double the number of investors in this survey.

No of Properties Owned More than 4

2% 5%

24%

51%

1 16%

None 0%

10%

20%

30%

40%

50%

60%

Most Singaporean respondents have been residing in their current abode for less than five years (29%), while 27% have been living in the same place for 11â&#x20AC;&#x201C;20 years, and 22% have been in the same place for 6â&#x20AC;&#x201C;10 years.

No of years in current premises

All my life

15%

More than 20 years

27%

11 - 20 years 22%

6 - 10 years

29%

0 - 5 years 0%

10%

15%

20%

25%

30%

125

There are more owners of private condominiums (up from 25% to 38%), while there is a slight dip in HDB flat owners (down from 60% to 49%) compared to the previous survey. Type of Properties Owned Other Factory/ Industrial property Hotel/ Resort Shop office Retail space SOHO Bungalow Semi - detached house Terrace House Private Condominium HDB Flats

3% 4% 6% 7% 6% 8% 9% 17% 38% 49% 0%

10%

20%

30%

40%

50%

42% of respondents live in flat/walk-up apartments, while 22% of respondents live in private condominium/serviced apartment.

Type of Property Currently Lived In 42%

Flat/ walk-up apartment Private Condominium/ services apartment Terrace house Semi-detached house Other Bungalow SOHO Shop office Retail space Factory/ Industrial property Hotel / Resort

22% 10% 7% 6% 4% 3% 2% 2% 1% 1% 0%

10%

20%

30%

40%

50%

126

Most of respondents purchased the home that they currently live in. Overall homeownership remains high at 89% in the 2012/2013 period. This is a slight dip from the 91% recorded in the previous 10-year period. Ownership of HDB flats saw the most noticeable drop over the past decade, falling from 91.9% in the 2002/2003 period to 89.9% in 2012/2013. The homeownership rate of condominiums and other apartments has fluctuated in recent years, increasing from 83.6% in 2002/2003 to 85.6% in 2007/2008, but this has since slipped to the current 84.5%. Meanwhile, households staying in landed properties enjoyed the highest levels of homeownership in Singapore, with 92.2% owning their homes in 2012/2013, up slightly from the 91% in 2002/2003.

Status of current property lived in

Other

23%

Rented

74%

Purchased

20%

40%

60%

80%

127

Online property sites are the preferred way of gathering property-related information. Newspapers/magazines are second favourite, while real estate professional/agent is third.

Source of property information and news 54%

iProperty.com

49%

Newspapers/magazines

45%

Other Web Portals (Google, Yahoo, etc)

33%

Talk to real estate professional/ property agent

21%

Television/radio

20%

Refer to family members and friends

19%

iProperty.com Mobile App

14%

Attend property seminars

Other

10% 20% 30% 40% 50% 60%

The top 5 types of information that respondents seek in online listings are: 1. Price comparisons 2. Detailed information (facilities) 3. Reviews on property/location 4 & 5. High quality photos, and price growth comparison

Information in online property listing that will help in decision-making Property Price Comparisons Reviews on the property/location Price Growth comparison Update/Summary on Governmentâ&#x20AC;Ś Amenities near property Home mortgage calculator Agent contact information Property Videos 1%

Other 0%

50% 44% 42% 40% 38% 38% 34% 29% 28% 27% 22% 21% 18% 12%

62% 58%

10% 20% 30% 40% 50% 60% 70%

128

In this group of respondents, there are more buyers than sellers, of those who made property transactions in the past two years. The properties purchased are mainly HDB Flats and Private Condominium units. The selection is unsurprising as most respondents are living in and own HDB Flats and Private Condominium units. These properties are purchased mainly in District 19 (Serangoon, Hougang, Punggol, Sengkang), District 18 (Tampines, Pasir Ris, Simei), and District 17 (Changi, Flora, Loyang).

Sold or purchased property within the past 2 years?

54%

none of the above 21%

Sold & purchased

20%

Purchased 6%

Sold 0%

10%

20%

30%

40%

50%

60%

Type of Property Purchased 29%

Private Condominum 22%

HDB Flat 10%

Terrace House Bungalow

Semi - Detached house

Retail Space

SOHO

8% 5%

Shop Office 1%

Hotel/ Resort 0%

10%

15%

20%

25%

30%

129

Larger percentages of respondents are not looking to purchase (32%) resale property, while 31% are in a contemplative mind-set when it comes to newly developed properties. Looking to purchase a Newly Developed Property

31%

Maybe

32%

No 15%

Yes

22%

More interested in resale property 0%

5% 10% 15% 20% 25% 30% 35%

Respondents’ top three sources of information on new launches/developments is consistent with the previous survey:  Developers  Online search engines / property websites  iProperty.com

Obtain information on new property launches/developments in the country 61%

Directly from developers Online- Search Engines iProperty.com Print Ads Property Exhibitions Refer to family and friends TV / Radio SMS Ads Other

55% 53% 38% 32% 20% 20% 10% 3% 0%

10%

20%

30%

40%

50%

60%

70%

130

Majority of respondents (40%) are looking to purchase property one to two years from now, while 27% are thinking about purchasing within the next six to 12 months. For purchases, 49% of respondents would purchase directly from developers while 48%.would get in touch with a real estate agent,

When to purchase

22%

At least 2 years or more from now

40%

1 - 2 years from now 27%

6 - 12 months 11%

Within the next 6 months 0%

10%

20%

30%

40%

How would the deal be initiated

49%

Directly from the developer

48%

A real estate agent

Other

10%

20%

30%

40%

50%

131

The top three obstacles hindering property purchase for respondents are: 1. Property prices are too high 2. Unpredictable property market 3. Banks making it hard to qualify for a home mortgage The top three obstacles that Singaporean respondents have in getting a home loan are the same as Indonesia, albeit being in a different order: 1. The economy / interest rates 2. Affording a downpayment 3. Insufficient income / salary If not interested in purchasing property at the moment, what is hindering you from doing so? 66%

Property prices are too high

49%

Unpredictable property market

39% 39% 35% 35%

Banks making it too hard to qualify for a home mortgage Canâ&#x20AC;&#x2122;t find a property that I can afford Lack of good financing options Not having enough money for a down payment

24%

Don't consider property a good investment choice

16% 11% 10%

Having too much debt from college and student loans Prefer to rent as it is cheaper than paying a loan

10% 20% 30% 40% 50% 60% 70%

Obstacles faced in getting a home loan 28%

The economy/interest rates 23%

Affording a down payment 16%

Insufficient income/salary

14%

Qualifying/getting approved

13%

Personal debt 6%

Other 0%

10%

15%

20%

25%

30%

132

The three main types of property that respondents prefer are ‘Private Condominiums/Serviced Apartments’, ‘Flats/Walk-up apartments’, and ‘Terraced Houses’.

Type of Property Interested in Private condominiums/serviced apartments Terraced House Flat/walk-up apartment Semi-detached house HDB Detached House Bungalow Retirement Homes Industrial Not considering Retail Office Student Housing Hotels Other

51%

20% 20% 17% 15% 12% 9% 8% 7% 6% 5% 5% 4% 3% 1% 0%

10%

20%

30%

40%

50%

60%

The budget that most respondents have for purchases are Below SGD500,000 (28%), SGD500,001 to SGD800,000 (32%), and SGD800,001 to SGD1 million (23%). In an effort to make homes affordable to ordinary Singaporeans, Singapore’s government builds and sells apartments to citizens; more than 80% of the city’s population now lives in these apartments, known as HDBs after the Government Housing Development Board which manages them. Around 90% of HDB residents own the flat they live in. Although HDB prices are also falling, most of the pain is in the private residential market, where some analysts such as those at ANZ expect prices to fall up to 10% this year.

Budget to Purchase

S$3 Million & above

14%

S$1 Million - S$3 Million

23%

S$800,001 to S$1 Million

32%

S$500,001 to S$800,000 28%

Below S$500,000 0%

10%

15%

20%

25%

30%

35%

133

The districts that respondents are interested in are:  District 3 & 5 - Alexandra, Queenstown, Tiong Bahru & Clementi, Dover, Pasir Panjang, West Coast  District 20 - Ang Mo Kio, Bishan, Braddell, Mei Hwan, Thomson  District 19 & 12 - Serangoon, Hougang, Punggol, Sengkang & Balestier, Serangoon, Toa Payoh

Which District they want to purchase property in D28 - Seletar, Yio Chu Kang D27 - Sembawang, Yishun D26 - Springleaf, Upper Thomson D25 - Kranji, Woodgrove, Woodlands D24 - Lim Chu Kang D23 - Bukit Panjang, Choa Chu Kang, Bukit… D22 - Boon Lay, Lakeside, Jurong D21 - Upper Bukit Timah, Ulu Pandan D20 - Ang Mo Kio, Bishan, Braddell, Mei… D19 - Serangoon, Hougang, Punggol, Sengkang D18 - Tampines, Pasir Ris, Simei D17 - Changi, Flora, Loyang D16 - Bayshore, Bedok, Siglap, Upper East… D15 - Amber Rd, Joo Chiat, Katong, Marine… D14 - Geylang, Eunos, Sims, Paya Lebar D13 - Macpherson, Braddell D12 - Balestier, Serangoon, Toa Payoh D11 - Novena, Newton, Thomson, Watten… D10 - Ardmore, Bukit Timah, Farrer, Holland,… D9 - Cairnhill, Orchard Rd, River Valley D8 - Little India D7 - Golden Mile, Middle Rd D6 - Beach Rd, High Street D5 - Clementi, Dover, Pasir Panjang, West… D4 - Habourfront, Mount Faber, Telok… D3 - Alexandra, Queenstown, Tiong Bahru D2 - Anson Rd, Tanjong Pagar D1 - Cecil, Marina, People's Park, Raffles Place

5% 8% 5% 9% 3% 11% 11% 8% 16% 15% 10% 5% 11% 12% 11% 8% 15% 13% 11% 9% 6% 7% 9% 17% 12% 17% 8% 5%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

134

Respondents’ top three motivators for property purchase are: 1. For rental income 2. For long-term investment – build/accumulate asset 3&4. Desire to own a home on my own / Desire for a larger home

Main motivation to purchase 29% 26%

For rental income 20% 19% 18% 17% 15% 12% 12% 11% 11% 10% 9% 8% 8%

Desire to own a home on my own Affordability of homes Desire for a home in a better area Change in family situation Desire to be closer to… Purchase home for family member or… Job-related relocation or move 0%

10%

15%

20%

25%

30%

51% of respondents make financial decisions with their spouse, partner or someone else in their household.

Main financial decission maker

I share financial decisions with my spouse, partner or someone else in my household

51%

23%

I make all financial decisions myself

16%

I consult a financial planner My spouse or someone else in my household makes all financial decisions

10% 0%

10% 20% 30% 40% 50% 60%

135

50% of respondents think that property prices will drop in the next 6 months. Rising interest rates are only half of the problem for homeowners. Residential properties in Singapore are falling in value as the Governmentâ&#x20AC;&#x2122;s price-cooling measures kick in. Private property prices fell 4% in 2014, according to initial estimates from the Urban Redevelopment Authority, a government body. The cost of homes is a hot topic in Singapore, where space is limited and a growing population with increasing number of foreigners have been pushing up demand and prices for years. An average non-landed private home costs between SGD$800,000 to more than SGD1.2 million, according to data from REALIS, Knight Frank Research. That compares with US$217,000 for an average single-family home in the U.S. in the third quarter of last year, according to data from the National Association of Realtors. How will the property market fare in the next 6 months

50%

Prices will go down 28%

Prices will remain about the same Don't know

11%

Prices will go up

11% 0%

10%

20%

30%

40%

50%

49% of respondentsâ&#x20AC;&#x2122; household income is sufficient for all their expenses. A sharp jump in Singaporeâ&#x20AC;&#x2122;s money market rates is threatening to make mortgages more expensive, a potential drag on an economy that is already suffering from a severe slowdown and a property price slump. Is the current household income is suffcient for the amount of expenses you have, including any payments on debt and mortgages

16%

Don't Know

35%

49%

Yes 0%

10%

20%

30%

40%

50%

136

OVERSEAS PROPERTY: MALAYSIA IS PREFERRED, BUT MOST ARE NOT INTERESTED IN ISKANDAR MALAYSIA Most respondents (87%) do not own properties overseas. For those who own properties overseas, their properties are largely in: 1. Malaysia 2. Australia 3&4. Philippines / United Kingdom The properties were mainly purchased via developers/seminars/exhibitions, and local agents from the country they purchased in â&#x20AC;&#x201C; same as the previous survey. Own any properties overseas

87%

13%

Yes

20%

40%

60%

80%

100%

In which country did you purchase this property Malaysia United Kingdom Philippines Australia Thailand China Other United States India Hong Kong New Zealand Indonesia Vietnam

46%

10% 8% 7% 6% 5% 4% 4% 3% 2% 2% 2% 1% 0%

10%

20%

30%

40%

50%

137

There are more respondents who are not looking to invest in property overseas in this survey (up from 48% to 58%) Are you considering investing in an overseas property?

18%

25%

Yes No Undecided

58%

The top four preferred overseas property has remained in the previous few surveys. This time, there is more interest in Malaysia compared to the previous survey. Preferred overseas location Malaysia Australia United Kingdom Thailand

H1 2015

H2 2014

H1 2014

34% 18% 9% 6%

30% 20% 12% 8%

34.7% 21.7% 9.3% 8.8%

Preferred overseas location 34%

Malaysia Australia United Kingdom Other United States Thailand Indonesia India New Zealand Philippines China Vietnam Hong Kong

18% 9% 6% 6% 6% 5% 4% 4% 4% 2% 2% 1% 0%

10%

15%

20%

25%

30%

35%

138

To respondents, properties in the chosen locations are a good investment, and they have plans to migrate or retire in that country in the future.

Why is property in that location attractive to you now? 27%

It is a good investment

23%

I expect to migrate or retire to that country in the future

13%

For vacation/residential purpose

12%

The exchange rate works in my favour

The potential yield if high

For my children to study aboard

The economic slowdown in that country has brought prices down The country has housing policies that encourage foreign ownership

Other

2% 5%

10% 15% 20% 25% 30%

Majority of respondents are interested in purchasing overseas property, 42% are only looking at it in at least a year from now.

When do you intend to buy property there

42%

At least 2 years or more from now 34%

1 - 2 years from now 17%

6 - 12 months from now 8%

Within the next 6 months 0%

10%

20%

30%

40%

50%

139

43% of respondents would budget less than SGD500,000 for overseas property.

What price range are you considering purchasing a property in the aforementioned country? 1% 2% 4%

More than S$2 mil S$1.5 mil to S$2 mil S$1 mil to S$1.5 mil S$900,001 to S$1 mil S$800,001 to S$900,000 S$700,001 to S$800,000 S$600,001 to S$700,000 S$500,001 to S$600,000 Less than S$500,000

9% 3% 5% 13% 19% 43% 0%

10%

20%

30%

40%

50%

Private condominium / serviced apartment’ is the preferred type of property overseas. The next preferred type of abode is ‘Bungalow’, while coming in at third spot is ‘Terrace house’. 1 2 3 4

Overseas Private condominiums / Serviced apartments Bungalow Terrace House Semi-detached house/flat/walk up apartment

Singapore Private condominiums / Serviced apartments Flat / Walk-up apartment Terrace house HDB

Type of property do you plan to buy there? 42%

Private condominium / serviced apartment

13% 11% 10% 10%

Bungalow Terrace house Semi-detached house Flat / walk-up apartment

3% 3% 3% 2% 2% 1%

Other Hotel / resort Retail space Shop office SOHO Factory / industrial property

10%

20%

30%

40%

50%

140

Online search is the all-time favourite, followed rather closely by newspapers/magazines, and exhibitions featuring overseas properties. For information on properties overseas, respondents would choose to attend exhibitions compared to talking to real estate agent. How do you search for overseas properties? 23%

Other web portals (Google, Yahoo, etc) Newspapers/magazines

17%

iProperty.com

17% 14%

Attend exhibitions that feature overseasâ&#x20AC;Ś

14% 13%

Refer to family members and friends

10%

15%

20%

25%

141

Against the backdrop of a weak Malaysian ringgit and the coming Singapore-Kuala Lumpur High Speed Rail, Malaysia has remained the preferred property investment location. However, other Malaysian states including Kuala Lumpur, Malacca and Penang have also targeted Singaporean investors, offering up these locations as viable options to investors who are interested in Malaysia. Zone A (Johor Bahru City) and Zone B (Nusajaya) are the two favourites for property purchase in Iskandar Malaysia. Launched in 2006 with five flagship zones, Iskandar Malaysia was meant to rejuvenate Johor Baru, which over the years had turned into a affordable market for Singaporeans. But the market has cooled down in 2014 after the Malaysian Government revised the Real Property Gains Tax and ruled that foreigners could only buy property worth RM1 million and above. Are you considering to invest in Iskandar Malaysia

21%

Yes No Undecided

70%

Among the five economic zones in Iskandar Malaysia, where would you choose to buy a property within Iskandar Malaysia? 5%

Zone E- Senai and Skudai

Zone D- Eastern Gate Dev

Zone C- Western Gate Dev

42%

Zone B- Nusajaya

43%

Zone A- Johor Bahru City 0%

10%

20%

30%

40%

50%

142

To Singaporean respondents, the top three reasons to purchase Iskandar Malaysia are: 1. Affordable property prices 2. Enhanced connectivity by 2018 via the RTS Network 3. Confirmation of the Nusajaya High Speed Rail (HSR) stop Greater congestion at the Singapore-Johor border crossing and higher toll rates are cramping growth in Iskandar Malaysia and stopping it from making a real difference in the lives of those staying in Johor. Ever since toll rates at the Causeway went up In October 2014, a Singapore car on a round trip to Johor Baru has to pay SGD12.80 in toll charges. Hence, the enhanced connectivity via the RTS Network and HSR is seen as a positive move.

What is the main reason that will drive you to buy a property in Iskandar Malaysia 57%

Affordable property prices

52% 36% 34% 33%

For retirement 0%

10%

20%

30%

40%

50%

60%

143

Most respondents would consider purchasing property in Iskandar Malaysia if policy changes in favour of foreign buyers and properties are value-for-money. The median price of a 5-room public flat in Ang Mo Kio, one of the most popular residential towns, is approximately SGD635,000. Hence, at such prices, some Singaporeans will find properties in Iskandar Malaysia attractively priced. According to data from Malaysiaâ&#x20AC;&#x2122;s National Property Information Centre (NAPIC), the average residential value of Johor property has risen by about 45% from MYR136,034 in 2009 to MYR197,147 in 2012. In comparison, the average residential value for the whole of Malaysia only increased by 30% during the same period. What would convince you to purchase a property in Iskandar Malaysia

Additional policy changes in favour of foreign buyers

41%

Value-for-money developments with lower psf prices

37% 17%

Additional discounts on unit prices 5%

More developments in Zones C, D and E 0%

10%

20%

30%

40%

50%

144

SENTIMENTS: AFFORDABILITY IS STILL A KEY WORRY, EVEN AS RESALE PRICES OF NON-LANDED PRIVATE HOMES DROP Majority of respondents (55%) think that HDB flat prices are not affordable to the average Singaporean. Resale prices for public housing properties and private residential properties declined significantly in 2014, according to the HDB and the URA. The latest flash estimate of the HDB Resale Price Index revealed that prices dropped by 1.4 per cent in Q4 2014, resulting in an overall decline of 6.1 per cent in 2014. URA flash estimates of the private residential property prices index showed a one per cent dip in Q4 2014, resulting in an overall decline of four per cent for 2014. This annual decline is the first since 2008. Are the current resale HDB flat prices affordable to the average Singaporean family

21% I don't know

55% 24%

Yes No

145

44% of respondents feel that foreign property buyers are responsible for driving up Singaporeâ&#x20AC;&#x2122;s property prices. This is in tandem with respondents (46%) who feel that the Government should impose ownership restrictions on foreigners. Are foreign buyers driving up Singapore's housing prices?

Other

25%

I don't know

29%

44%

Yes 0%

10%

20%

30%

40%

50%

146

Singapore has experienced an influx of expatriates in recent years. Singapore has the sixth-highest percentage of foreigners in the world; about 38% of Singaporeâ&#x20AC;&#x2122;s population are foreigners. Of these, 10% are permanent residents, and the remaining 28% are expats. Property investments by foreign buyers is still a concern in singapore. Though discouraged by the ABSD (Additional Buyerâ&#x20AC;&#x2122;s Stamp Duty) of 15 per cent, purchases by non-permanent residents still accounted for roughly 10 percent of transactions as quoted by Donald Han, managing director at Chestertons Singapore. Based on an MAS survey that covers data collected on overseas properties transacted by real estate agencies in Singapore, the value of overseas property purchases transacted in Singapore rose from $1.9 billion in 2012 to $3.0 billion in 2013, before moderating to $1.1 billion in H1 2014 (Chart G13).50 Properties in the UK, Malaysia and Australia accounted for 91% of total transactions by value and 76% by number in H1 2014, but households also purchased properties in Japan, the Philippines and Thailand. As foreign speculators and low interest rates in Singapore sent housing prices soaring beginning in 2006, the government took action. In 2009, officials tightened lending by barring interest-only mortgages for some housing and forbidding developers from absorbing interest payments for units under construction. The government also taxed speculators and placed levies as high as 15% on foreign buyers. Home prices hit a record in September 2013.

What measures do you think the Government can implement to ensure prices are even more affordable?

Impose ownership restrictions on foreigners who can invest or purchase Singapore property

45%

Implement regulations on housing prices for property developers

31%

Introduce other cooling measures similar to TDSR to benefit first time buyers

20% 3%

Other

10%

20%

30%

40%

50%

147

The sentiment has changed from the previous survey. Previously, 45% of respondents prefer the government to manage the prices of HDB flats only. In this survey, 46% prefer the government not to manage prices of HDB flats. Should the government be responsible for managing HDB prices?

46%

38%

Yes

17%

I don't know 0%

10%

20%

30%

40%

50%

26% of respondents opine that high-end luxury properties (non-landed) would see a price drop in H1 2015, followed by new and resale private condominiums. In November 2014, it was reported that number of houses placed on the auction block by banks has increased by nearly five-fold as borrowers struggle to sell their luxury units amid the falling prices and the governmentâ&#x20AC;&#x2122;s tough cooling measures.

In your opinion, which property type will see a price drop in H1 2015 26%

High-end luxury properties (non-landed)

23%

Resale private condominiums

20%

New private condominiums

14%

HDB resale flats

12%

High-end luxury properties (Landed)

Landed properties

10% 15% 20% 25% 30%

148

31% of respondents feel that their property will retain its value in H1 2015, while 45% feel otherwise. According to the 2014 fourth quarter report based on HDB resale and rental data for 4Q14 from HSR Research, the HDB Resale Price Index is down 1.5% quarterâ&#x20AC;&#x201D;onquarter and 6% year-on-year to 137.0 in 4Q14 from 139.1 in 3Q14 and 145.8 a year ago. Median resale prices for 3-room, 4-room, 5-room and executive HDB flats have fallen in 16, 22, 13 and 3 HDB towns respectively. Another 5-8 per cent decline in overall prices is expected for the whole of 2015, as quoted by ERA Singaporeâ&#x20AC;&#x2122;s Key executive officer Eugene Lim. Overall resale volume and resale have continued to rise for three consecutive quarters, perhaps due to the narrowing gap between price expectations of buyers and sellers.

If you are a current homeowner, are you confident that your property will retain its value in H1 2015

45%

31%

Yes

24%

I don't know 0%

10%

20%

30%

40%

50%

149

The reduction of Mortgage Servicing Ratio (MSR) has not affected majority (54%) of respondentsâ&#x20AC;&#x2122; decision in property purchase. There is a shift from the previous survey, where 53% of respondents were affected by MSR. In the public housing market, one of the property measures that actually reduced the amount or demand is the mortgage servicing ratio (MSR). The MSR actually restricts the amount of income that an individual can use to service the loan, and by restricting the amount of financing available to the home buyer, the government also in a way restricts their housing budget, and this actually has an impact on softening the prices. HSR Research said that the overall resale volume has increased by 2.7% quarter-onquarter and 15.8% year-on-year to 4,635 in 4Q14, from 4,513 in 3Q14 and 4,001 a year ago.

Has the reduction of the Mortgage Servicing Ratio (MSR) from 35% to 30% by the government in August 2013 affected your decision to upgrade or purchase another property?

54%

46%

Yes 42%

44%

46%

48%

50%

52%

54%

150

66% of respondents said that property remains unaffordable, despite lower prices in certain regions. HDB Resale Price Index fell 1.5% quarter-on-quarter and 6% year-on-year to 137.0 in 4Q14, from 139.1 in 3Q14 and 145.8 in 2013, with HDB resale prices to continue moderating in 2015 with no tweaks or removal of the cooling measures, according to the 4Q14 update on HDB resale and rental report from HSR Research. According to reports by both URA and HSR, property prices in certain regions have been lowered in 2014 compared to previous years. Thus, have property prices become more affordable to you

34% Yes 66%

On a scale of 1 to 6 (1 being most important and 6 being least important), respondents are for lowered price per sq ft and early-bird discounts. They are least interested in vouchers for furniture.

With market exuberance for private homes tempered by the cooling measures and TDSR framework, more developers are reviewing their marketing and pricing strategies to entice buyers. Please rank the factors that you take into consideration for a new propert 5.03

Lowered price per sq ft

3.92

Option of smaller unit sizes

3.71

Early-bird discounts

3.42

Partial absorption of stamp duty

3.01

Direct Price Discounts

1.90

Furniture vouchers

0.00

1.00

2.00

3.00

4.00

5.00

6.00

151

Slightly more than half of respondents surveyed (51%) are satisfied with the governmentâ&#x20AC;&#x2122;s efforts in cooling the property market. Resale prices for public housing properties and private residential properties declined significantly in 2014, according to the HDB and the URA. The latest flash estimate of the HDB Resale Price Index revealed that prices dropped by 1.4 per cent in Q4 2014, resulting in an overall decline of 6.1 per cent in 2014. This is the biggest fall since 2001 (8.2 per cent) according to Mr Ismail Gafoor, Chief Executive of PropNex Realty, interviewed by TODAY. URA flash estimates of the private residential property price index showed a one per cent dip in Q4 2014, resulting in an overall decline of four per cent for 2014. This annual decline is the first since 2008. The residential property market will see prices continue to moderate by four per cent to ten per cent in 2015, according to several property analysts interviewed by Singapore Business Review. The expected decline is attributed to various reasons, including the cooling measures, upcoming supply of homes, weak buyer sentiment and the expected hike in interest rates.

Despite the cooling measures imposed since September 2009, private home prices are still at more than 50% above the last trough in June 2009. Are you satisfied with the governmentâ&#x20AC;&#x2122;s plans announced in Budget 2014 to keep property market cooling measures i

49%

51%

Yes No

152

OUTLOOK FOR 2015 In Cushman & Wakefield’s Research Publication titled, Top Trends To Watch in 2015, it states that economic growth continued to decelerate across the region. As a result, leasing activity came off the boil in the region’s large markets but showed some resurgence as political stability and some policy changes helped to stimulate regional economies in the second half. GDP growth in Asia Pacific is anticipated to continue to hover around 5.0%-5.3% through 2016 as momentum fades in the region’s largest economies. China’s growth is set to decelerate to somewhere between 6.0% and 7.0% in the next couple of years as the government prioritizes economic rebalancing over growth. Similarly, Australian policymakers will continue to facilitate an economic shift in favor of non-mining industries in 2015 amid weak commodity prices. Nonetheless, the rest of the region should gather momentum in 2015.

The IMF put Malaysia’s growth at 5.2% in 2015, down from 5.9% in 2014. The World Bank put Malaysia’s 2015 growth rate at a much lower 4.7%. The IMF report put the forecast at 5.5% for Indonesia. Singapore’s growth forecast for 2015 has just been cut by the city state’s largest bank DBS to 3.2% from 3.6%, citing continued exposure to divergence in global monetary policies. Lower oil prices, however, should benefit the manufacturing sector in the country, DBS said.

153

The World Bank said that the global economy is showing signs of recovery, albeit at an uneven pace, while significant uncertainties remain regarding the strength and sustainability of the recovery in high-income economies and about the timing of policy actions by central banks in their respective countries. The worldâ&#x20AC;&#x2122;s growth is forecast to be 2.6% growth in 2014, and an average of 3.3% from 2015 to 2017, it said.

154

About iProperty Group Limited (www.iproperty-group.com) Listed on the Australian Securities Exchange, the iProperty Group (ASX:IPP) owns and operates the market leader in Hong Kong, Malaysia and Indonesia as well as the leading website in Singapore. Headquartered in Kuala Lumpur, Malaysia, the Company is focused on developing and operating leading property portals with other complementary offerings in Asian markets. It also operates market property exhibitions in Asia. iProperty Group is continuously working to capitalise on its market-leading positions and the rapidly growing online property advertising market throughout the region. * Disclaimer Although every precaution has been taken in the preparation of this report, the publisher and author assume no responsibility for errors or omissions nor is liable for damages resulting from the use of the information contained herein.

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