Online Survey by iProperty.com Reveals That Consumers in Asia Continue to View Affordability as a Major Concern

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The iProperty Group leveraged on their market leading websites in Malaysia (iproperty.com.my), Indonesia (Rumah123.com and rumahdanproperti.com), Hong Kong (GoHome.com.hk), and Singapore (iproperty.com.sg) as a bellwether to gauge the opinions of thousands of consumers in the region.

iProperty Group CEO, Shaun Di Gregorio

iProperty Group CEO, Shaun Di Gregorio

The survey attracted close to 30,000 respondents, majority aged between 26 and 50 years. Survey respondents were made up largely of executive/managerial and professional occupations and based on their annual household income...

An online cross-market property survey by the iProperty Group, owner and operator of Asia’s No.1 network of property websites, revealed that despite the various cooling measures introduced by the various governments in Asia, consumers in Malaysia, Indonesia, Hong Kong, and Singapore continue to view affordability as a major concern.

Across the four countries surveyed, the survey respondents had somewhat more in common than they had differences. The key similarities include:

  • Affordability and rising house prices continue to remain the biggest concern amongst respondents in all four countries.
  • Majority of people answering the survey in each country had occupied their current premises for less than five years
  • Respondents want to purchase property that is newly developed
  • A significant percentage of respondents obtain property related information and news online compared to any other medium.

The iProperty Group leveraged on their market leading websites in Malaysia (iproperty.com.my), Indonesia (Rumah123.com and rumahdanproperti.com), Hong Kong (GoHome.com.hk), and Singapore (iproperty.com.sg) as a bellwether to gauge the opinions of thousands of consumers in the region.

The survey attracted close to 30,000 respondents, majority aged between 26 and 50 years. Survey respondents were made up largely of executive/managerial and professional occupations and based on their annual household income; most respondents belong to the low- and middle-income group just like the previous survey.

Key Findings

“The survey findings revealed a high percentage of first time home buyers especially in Malaysia, Indonesia and Singapore. Their factors of consideration when deciding to purchase property has also changed, with location trumping price, which was not the case six months ago. In Malaysia, Indonesia and Hong Kong the respondents’ main motivation to purchase property is to own their own home, while Singaporeans surveyed are motivated by long-term investment,” said iProperty Group’s Chief Executive Officer, Shaun Di Gregorio.

However, in Hong Kong, while price and location were the key factors of consideration, it was interesting to note that the living environment were also a major consideration.

When it came what type of property these survey respondents preferred, the survey findings showed that landed property was the most popular type of property in Malaysia and Indonesia. In Hong Kong and Singapore, the survey revealed that private condominiums were the most popular type of property.

“Landed property has long been properties favored by various investors and property buyers over the course of time and the market for landed property continues to be the favorite. The main reason - as development and resident population rapidly grows, land tends to grow scarce, hence the more expensive prime land becomes,” said Di Gregorio.

This phenomenon can be seen in Singapore and Hong Kong, where the cost of owning landed property is overwhelmingly high, therefore making private condominiums the favorite option.

Due to this, it was not surprising that the survey findings revealed nearly 40% of Singaporeans surveyed were keen in investing in properties in Malaysia and Australia. Singaporeans surveyed show reduced interest (from 42% to 39%) in Malaysia as an investment option, while interest in Australia has picked up (from 15% to 19%).

In Hong Kong, a mere 10% considered buying property overseas. Of those interested in the overseas property market, South East Asia were the preferred choice. Respondents who chose the South East Asian regions (including Singapore, Malaysia, Thailand and Indonesia) climbs to 39%, an increase from the 35% in the last survey. Level of support for opportunities in the United Kingdom (25%) and Australia (24%) remains high. Interest in China still remains strong, with Shenzhen being the most popular among the Chinese cities named.

Malaysia – The Wait-and-Observe Stance is Slowly Dissipating

According to the Malaysian Institute of Estate Agents (MIEA), property values grew 20% to 30% in 2010 and 2011, with residential properties in some areas rising as high as 30% to 35%. With property prices in Malaysia appreciating dramatically beyond the affordability of most people, hence, it’s no surprise that respondents continue to view affordability as a major concern.

“Owning affordable houses in the densely populated Greater Klang Valley, which is home to approximately 6 million people, and in major towns, has become increasingly difficult for the low-income group or even for some middle-class families. 77% compared to 69% of respondents in H1 viewed affordability and rising house prices as a major concern. Close to 90% have rated the current property prices as unaffordable,” added Di Gregorio.

He added that to help curb speculation and control property prices, the Malaysian Government and Bank Negara Malaysia has stepped in and introduced various cooling measures to try and 'cool' the local property market and prevent the property prices from rising further.

On the international front, Malaysia has become a preferred country for foreign property investors, especially after Hong Kong and Singapore imposed 15% levies to slow down foreign investments that had overheated their property markets.

Indonesia – Continued Growth amidst New Regulations

Unlike many Asian countries, Indonesia's economy is powered mostly by domestic demand rather than exports. Jakarta saw a 38 % jump in its residential luxury market prices last year. Apartments in the Central Business District (CBD) are in high demand due to the overcrowded and congested conditions in the metropolis of 12 million. In general, property prices in Indonesia are still lower than in Malaysia and are one-eighth the price in Singapore.

51% of respondents feel that the upcoming legislative elections and presidential elections in 2014, property market have affected the property market and this could be attribute to the uncertainties the elections might bring.

“Unlike other countries, foreign property ownership in Indonesia is difficult and it was interesting to note that 58% of respondents do not want the government to allow foreigners to purchase apartments/condominiums in Indonesia. They could be concerned that the demand from foreigners could further increase the property prices in Indonesia,” shared Di Gregorio.

More than half (58%) of respondents viewed the current mortgage rates in Indonesia to be heavy, while 36% felt that it is at an ideal rate. The biggest concerns that respondents had about the property market was also affordability and rising house prices.

Hong Kong – Despite New Cooling Measures, Property Prices Continue to Soar

Dubbed the New York City of Asia, Hong Kong continues to be one of the hottest real estate markets, with prices going up 28% on average in the first quarter compared to where they were a year ago.

The government has put in place various policies to curb real estate buying and yet home prices rose 10.7% on a quarterly basis, the most of any country. Over 85% of respondents consider properties to be overpriced. 65% of respondents believe that changes in bank mortgage rates will be the biggest influencing factor of the property development trend in 2H, followed by the extra stamp duty introduced by the government (57%). It comes as a surprise that China’s economic development is believed to have the least impact, with only 36% of respondents agreeing on this.

Di Gregorio said that the majority of the public considers properties to be overpriced, at the same time the government’s cooling policies appear to be showing promising initial results.

“The survey further reveals that the public has both low purchase and sale intent at the moment, yet the implementation of “First-hand Sales Ordinance” helps boost homebuyer confidence as a whole. Respondents who believe the government’s cooling measures would lead to a drop in transaction volume amount to 44%, a rise from 35% since the last survey whilst respondents who expect a drop in property price jumps from 12% (last survey) to 21%, showing an increasing in public confidence towards the government’s cooling measures,” added Di Gregorio

Knight Frank predicts that the residential supply will remain tight in the short term. With various cooling measures remaining in place, the residential market is expected to stay quiet and sales to fall about 10% in 2013. The mass residential prices will drop around 10%, while prices in the more resilient luxury sector will fall 5%.

SINGAPORE – Affordability Concerns Remain

When asked about the property market in Singapore, Di Gregorio explained that along with many other countries, has been concerned about the effect of low global interest rates and high levels of liquidity on its asset markets, especially the property sector.

“The affordability of housing and the overall cost of living are major concerns among Singaporeans, who are also angry about the number of foreign workers in the small country of 5.3 million people. 72% of respondents think that foreigners have a part to play in driving up property prices,” elaborated Di Gregorio.

A majority of respondents (43%) feel that the Government is not delivering enough housing for foreigners, which might explain why respondents feel that foreigners have driven up property prices, due to insufficient supply of housing. This is despite the fact that foreigners’ proportion of private home transactions has slipped downward as iterated in the question prior to this.
60% of respondents surveyed calls for more steps to cool the property market. The government agrees to this sentiment as Singapore's central bank has introduced rules to ensure that a property buyer's monthly payments do not exceed 60% of income, a move aimed at cooling the property market and ensuring investors are not caught out by a rise in interest rates.

Singaporeans continue to view properties in Malaysia as a favourable investment, especially those in key locations of the Iskandar region in Johor and traditional hotspots such as Kuala Lumpur, despite signs of stabilisation in the month of July in the Singapore property market.

In conclusion, Di Gregorio said that, “The survey report offered us valuable insights of the property market and the findings also showed us that the property market is very strong but consumers are still cautious. We trust that this report will be highly beneficial to not only consumers, but also to developers, real-estate agents and local and international property buyers, who are looking to gauge the sentiments of the Asian property market from an unbiased perspective.”

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About iProperty Group Limited (http://www.iproperty-group.com)

Listed on the Australian Securities Exchange, the iProperty Group (ASX:IPP) owns and operates Asia’s No.1 network of property websites under the iProperty.com umbrella brand.

Headquartered in Kuala Lumpur, Malaysia, the Company is focused on developing and operating leading real estate Internet portals with other complementary offerings in Asian markets. It currently operates online property portals for consumer and business needs in the markets of Malaysia, Hong Kong, Indonesia and Singapore, and has investments in India and Philippines. Most of its sites are ranked first in their respective markets.

Along with 18 property websites around the region, the Group’s portfolio also includes the first comprehensive regional commercial property website, CommercialAsia.com, as well as a regional property exhibition business and a Malaysian monthly property magazine.

iProperty Group Network of websites:

  •     Malaysia: iProperty.com Malaysia
  •     Singapore: iProperty.com Singapore
  •     Hong Kong: GoHome.com.hk and House18.com
  •     Indonesia: rumah123.com and rumahdanproperti.com
  •     India: iProperty.com India
  •     Philippines: iProperty.com Philippines
  •     Events: iProperty.com EXPO
  •     Commercial: CommercialAsia.com
  •     Luxury: iLuxuryasia.com

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