Despite the fall in property prices last year, the majority of Singaporeans feel home prices are still too expensive but are ready to enter the market when the price is right, according to a new survey.
In a survey published by online real estate portal PropertyGuru on Wednesday, 60 percent of Singaporeans polled said they believe property is still overpriced. Almost 70 percent said the government should maintain its cooling measures. The survey, which took place between October and December 2014, polled 940 people.
Private home prices on the island declined 4.3 percent last year as property curbs continued to work their way through the market and buyers remained cautious. Resale prices of public housing, or Housing Development Board (HDB) flats, fell 6 percent.
Since 2009, the government has introduced eight rounds of measures to crack down on property speculation and take some heat out of the market.
Property remains a hot-button issue among Singaporeans, many of whom feel rising living costs in the city-state are hard to cope with.
Singapore ranked as the most expensive city in the world to live in last year, according to the Economist Intelligence Unit, reflecting its strong local currency and the high cost of cars, utilities and clothes.
While the majority of Singaporeans feel home prices are too expensive, 43 percent said they were likely to purchase a property in the next six months, suggesting that buyers are holding out for a price they deem fair.
Buyers are interested in areas including Orchard and River Valley, which are located in the city's core central region, as well as suburban neighborhoods such as East Coast, Marine Parade, Hougang, Punggol and Sengkang, according to PropertyGuru.
PropertyGuru predicts private home prices will decline 5-8 percent this year, while HDB flat resale prices will fall 4-6 percent amid a continued slump in transaction volumes and increased supply of housing.
"Developers will have to gradually adjust their prices so that their projects are more affordable to a bigger pool of buyers. For mid-sized mass market private homes of 800-1,100 square feet, the sweet spot range will typically be between 900,000 and 1.1 million [Singapore dollars]," the firm said.
The projection is based on the number of enquiries submitted by users of PropertyGuru's website via email. The firm says there is a strong correlation between enquires and transactions.
The steepest price declines will likely emerge in the neighborhoods located in central Singapore where rentals are coming under most pressure due to expat tenants' shrinking budgets and an increased number of private home completions, Lewis Ng,Singapore managing director at PropertyGuru, told CNBC.
The decline in rental yield dampens a property's attractiveness as an investment, bringing prices under pressure.
For medium-term investors, Ng noted that properties located near public trains, or the MRT, stations offer attractive capital appreciation prospects. Close proximity to an MRT station commands an average premium of 10-15 percent, according to PropertyGuru. Apartments along the Thomson-East Coat line, which is due to be completed in 2023-2024, are a potential hotspot, Ng said.