More expect government to introduce property cooling measures

February 10, 2021

The quarterly survey polled around 40 to 50 senior executives in the real estate sector. The possible risk of the government stepping in to cool the market jumped from 19.2% in Q3 2020 to 44.7% in Q4 2020.

The latest Real Estate Sentiment Index showed that more market observers expect the government to intervene to cool the private home market, reported The Business Times (BT).

Published by the National University of Singapore Real Estate (NUS+RE), the quarterly survey polled around 40 to 50 senior executives in the real estate sector.

NUS+RE represents the university’s Department of Real Estate and the Institute of Real Estate and Urban Studies.

One risk factor that significantly increased include the possible risk of the government stepping in to cool the market, jumping to 44.7% in Q4 2020 from 19.2% in Q3 2020.

Another was the potential risk of a real estate price bubble or excessive speculative activities which rose to 25.5% in Q4 from 5.8% in the previous quarter.

Recommended article: Appraisal Time: How good a job did the cooling measures do?

Meanwhile, rising construction costs emerged as the top potential risk factor that could temper sentiment over the next six months, overtaking economic woes, noted BT.

The proportion of respondents indicating concerns on increasing construction costs climbed to 85.1% in Q4 compared to 76.9% in Q3.

“Construction costs are expected to increase in the next six months due to shortage of manpower, supply disruptions of building materials and tighter regulations imposed on construction sites. This could potentially lead to persistent demand-supply mismatch in the near term,” said one respondent as quoted by BT.

The proportion of respondents who sees job losses or a decline in domestic economy as a potential risk factor dropped to 61.7% from 100%, while those who are concerned of global economic slowdown fell to 76.6% from 96.2%.

Suggested read: What is a Property Bull Run and Is It Already Happening in Singapore?

As to future launches and sales, around 58% of property developers surveyed expect prices to moderately increase, while 29% sees prices remaining stable.

About 54% of developers expect a moderate or substantial increase in the number of units coming to the market over the next six months.

NUS+RE noted that the study’s composite index, which is a derived indicator of the overall real estate market sentiment, continued on an upward trend as it rose to 6.5 in Q4 2020 from 5.4 in the previous quarter, indicating an optimistic outlook.

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