The private home buyer’s journey — Ong Kah Seng

MAY 11 — Private home buying interest has remained significant despite the Singapore government imposing five rounds of market cooling measures in the past 2½ years, with sales of suburban condominiums remaining buoyant even as prices scale new heights.

The proliferation of shoebox apartments has also meant that more are able to embark upon their personal quest for a dream property. Indeed, the surge in supply of these small units in recent years has been met by overwhelming buyer response.

Whether it is an individual home buyer or joint property investors or families going for a better quality of life by upgrading from HDB flats, there is often a strong motivation for targeting that favourite property.

For investors, the motivation is more direct — perceived financial returns. Investors generally are seasoned property players, although there will be the new investors. The newbies, together with single owners of small apartments as well as some HDB upgraders, may have been primed for the purchase by various factors. They will find that the quest can be both exciting and stressful.

The majority who embark on buying private property decisions have been roused in some way.

For some, such awakening may have come from seeing their peers profiting through property investments and speculation. For some singles who buy shoebox apartments, it may stem from a desire for independence, to live apart from their families. There may also be those who have visited friends who live in private homes and are inspired to own one as soon as possible.

Daily leisure activities may also have shaped one’s desire to buy a property. In addition to fanciful show flats, shopping can also conjure up a liking towards property. With the arrival of many mega malls and big-box retail stores that present a convenient array of exciting offerings, the leisure shopper is spoiled for choice.

Home design concept stores, furniture chains and boutiques showcase all kinds of DIY offerings or professional services to consumers, some of whom are planning to own a home. And for those on tight budgets, buying a smaller or far-flung property will become more of an urgency.

Upon setting his or her mind on buying a home, the property seeker will likely use different means to source, compare and affirm the property choices. Most property seekers will validate these through studying and understanding district development plans, consulting friends in property and mortgage-related trades to ascertain the property’s potential and financing requirements.

The process will be both intensive but exhilarating for the earnest buyer, particularly for one with limited investment background who gets to understand many property and financial concepts.

The recent months have seen tremendous sales perks from developers — in the form of rebates or discounts from listed prices. Such schemes are surely attractive for those who have already tuned themselves psychologically into the mode of buying. The quest for private homes has also extended from developer sales to the resale market recently.

Buyers who have concluded their house hunting and purchase will be most excited to share the journey with peers. But it must be noted that while the property hunt is thrilling, the actual journey begins after one commits to a purchase.

The real benefits and the financing requirements will go hand-in-hand, depending on prevailing market conditions and whether the rental income is sufficient to meet the mortgage payments and other expenses. These have probably been downplayed in today’s context of an increasing desire for wealth opportunities and higher risk thresholds.

The current thinking is that given the large number of uncertainties, whether economic or supply-led fluctuations or possible policy calibrations, a buyer should not think too far but enjoy the direct benefits of owning the property. Since there are so many uncertainties, it is “the journey that counts rather than the destination”.

The past decade has seen the prevalence of “specu-vestors”, but since the harsh additional seller’s stamp duty of last December, speculation has become a thing of the past.

Most investors are now also thinking of owner-occupation should the property not be able to be rented out, hence creating another group that can be called “investor-piers”. That’s also a major property-owning mindset for many shoebox apartment buyers.

While the destination may not count as much as the journey, if the buyer enters the market at the wrong time or overestimates his long-term financing capacity, the journey will be a long and difficult one. — Today

* Ong Kah Seng is director at R’ST Research, an independent property market research company in Singapore. - The Malaysian Insider