Majority of developers feel that market conditions will deteriorate further due to the restrictive property cooling measures.
Property developers in Singapore remain pessimistic over the current state of the residential market and its outlook, according to the latest NUS-Redas Real Estate Sentiment Index, reported The Business Times.
The quarterly report uses a survey to collect data on respondents’ perceptions and expectations of current and future property market conditions.
In particular, the current sentiment index increased to 3.9 in Q1 2016 from 3.6 in the previous quarter, while the future sentiment index rose to 3.6 from 3.4 previously. Consequently, the overall index climbed to 3.8 compared to 3.5 in Q4 2015.
Despite the slight improvement, the findings show that developers are still unhappy as a score below 5 indicates weakening market conditions, whereas a score above that denotes positive conditions, said Sing Tien Foo, Associate Professor, Department of Real Estate, National University of Singapore.
In addition, about 58.4 percent of respondents believe that market conditions will deteriorate further due to the government’s stance that the existing property curbs should stay for now. Around 55.8 percent also think home sales will likely be pressured by the Additional Buyer’s Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) framework.
“Given that cooling measures have remained unchanged and the overall sentiment remains muted, the market is unlikely to be strong enough to withstand any increase in prices. Developers are likely to maintain or lower prices moderately to move units,” said one of the respondents.
In fact, 47.2 percent expect home prices to marginally soften over the next six months, compared to 44.4 percent who believe that prices will remain stable.
Nevertheless, about 33 percent of developers forecast a rise in new launches, while 52.8 percent think the volume will be the same. Only 13.8 percent said they would launch moderately fewer units.
In terms of risk, 84.4 percent of respondents believe the sluggish global economy could negatively affect market sentiment in the next six months, while 68.8 percent cited the threat posed by potential job losses and slowdown in the local economy.
About 46.9 percent also raised fears over growing inflation, rising interest rates, and tightening of finance and liquidity. Another factor they identified which could worsen market sentiment is a supply glut.
Although the sample size of the survey is not known, it is understood these respondents include developers, consultants, financial institutions, professional firms and service providers, thus making it representative of the overall real estate industry.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
