More execs cite cooling measures as biggest risk facing property market

Cheryl Chiew7 May 2021

Of the 50 real estate executives surveyed in March, 87.8% believe the possibility of property cooling measures is the biggest risk the property market faces in the next six months.

More real estate executives have cited cooling measures as the biggest risk the Singapore real estate market faces, reported The Business Times (BT) citing the latest Real Estate Sentiment Index by the National University of Singapore Real Estate (NUS+RE).

NUS+RE represents the Department of Real Estate, as well as the Institute of Real Estate and Urban Studies at the university.

Of the 50 real estate executives surveyed in March, 87.8% believe the possibility of property cooling measures is a potential risk that may affect market sentiment within the next six months. The figure is almost double the 44.7% registered in the previous quarter.

BT noted that the composite sentiment index of the study – which is a derived indicator for overall real estate market sentiment – increased for the fourth quarter in a row since the easing of the circuit breaker in the third quarter of 2020.

On a 10-point scale, the index stood at 6.8 in Q1 2021 from 6.5 previously. Respondents believe the market condition had improved during the three months and will continue to improve over the next six months.

Rising construction costs was named the second biggest risk factor, with 77.6% of the respondents citing it in the Q1 2021 survey, down from 85.1% in Q4 2020.

Rising inflation or interest rates emerged as the third biggest risk, with the proportion of respondents indicating these jumped to 65.3% from 8.5% in the previous quarter. This category registered the largest change within the two quarters.

Those who saw job losses or a decline in the domestic economy as a potential risk dropped to 32.7% from 61.7%, while those concerned with a global economic slowdown halved to 34.7%, from 76.6%.

Meanwhile, developers cited rising labour costs as their biggest concern when it comes to development costs.

“The construction industry is facing challenges in employing workers and the limited supply of migrant workers pushes up labour costs,” said one developer as quoted by BT.

In fact, 70.8% of the respondents said they were “very concerned” about this matter, while the remaining 29.2% described it as a “moderate” concern.

Another major source of concern for developers is the cost of building materials. About 45.8% of the respondents indicated that they are “very concerned” about this, and 50% were “moderately concerned”.

On future launches and sales, around 70% of the respondents expect the number of units launched to moderately or substantially increase in the next six months, while 12.5% expect launches to moderately decrease.

“Developers would continue to push out more launches over the next six to 18 months for land parcels that were bought between 2016 to 2018, due to the additional buyers’ stamp duty five-year completion requirements,” said one survey participant as quoted by BT.

About 50% of the respondents expect a moderate or substantial increase in property prices over the next six months, while 41.7% sees prices remaining at the same level as in Q1 2021.

“The improved market sentiment and the strong demand, coupled with the depleting pool of unsold units, will enable developers to settle at higher prices,” said another respondent as quoted by BT.

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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: 


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