Sentiment among property developers down on July cooling measures

Romesh Navaratnarajah23 Oct 2018

The latest round of cooling measures were described as unexpected and surprising, as well as extremely disruptive.

Property cooling measures announced in July have dampened sentiment in the property market, with the Real Estate Sentiment Index (RESI) falling sharply to 4.0 in Q3 from 6.6 in Q2, reported the Straits Times.

Jointly published by the Real Estate Developers’ Association of Singapore (REDAS) and the National University of Singapore’s Department of Real Estate (DRE), the index is derived from a survey of senior executives of REDAS member firms.

More: Govt Cools Property Market With Higher ABSD Rates, Tighter LTV Limits

A “net balance percentage” is used to score key determinants of sentiment within the real estate market.

Described as “unexpected and surprising” as well as “extremely disruptive”, the measures heavily penalised developers with hefty additional buyer’s stamp duty (ABSD), making land-banking decisions “challenging and risky”, said survey respondents.

ABSD was raised by the government as part of its latest round of property cooling measures.

In fact, 90.2 percent of respondents believe that the hike in ABSD rates would seriously affect the collective sales market over the next six months.

The survey noted that residential properties within the Core Central Region (CCR) are more sensitive to the ABSD policy compared to those in the Outside Central Region (OCR).

This comes as new non-landed residential property launches in the CCR – comprising districts 9, 10, 11, downtown core and Sentosa – are likely to see more resistance following the higher ABSD rates.

Looking ahead, respondents cited the slowing global economy, rising interest rates and inflation, as well as the tightening of financing or liquidity within the debt markets, as the top three potential risks that could adversely affect market sentiment over the next six months.

“Uncertainties in external economic conditions coupled with the high transaction costs imposed by the new ABSD policies may have double whammy impact on the local residential markets,” said NUS associate professor Sing Tien Foo.

“The sharp declines in the Q3 2018 sentiments reflect bleak outlooks of the property players, especially on the residential markets in the next six to 12 months.”

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Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email


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