Property developers here might just be at the final stage of grief, easing from depression to acceptance – going by a sentiment index for the sector.

The NUS-Redas Real Estate Sentiment Index, or RESI, survey for the third quarter shows continued improvement in both developers’ sentiment and overall sentiment.

The composite sentiment index, a derived indicator for the overall real estate market sentiment in Singapore went up to 4.5 from 4.2 in Q2. The current sentiment index increased to 4.5 from 4.3 in Q2; and the future sentiment index increased to 4.5 from 4.0 in Q2.

However, as the indices are still below 5.0, they signal deteriorating market conditions.

Of those surveyed, 93.7 per cent expect the global economy to slow down. Furthermore, 77.8 per cent identify job losses and weakening growth in the domestic economy as potential risk factors in the next six months.

In its latest biannual review published on Tuesday, the Monetary Authority of Singapore (MAS) said that there was an emerging slack in the labour market. Concerns over the labour market, and therefore, wages, would impact spending.

Nearly half – or 46 per cent – expect further tightening of finance and liquidity in the debt market and 46 per cent are concerned about rising inflation and interest rates.

About a quarter view excessive supply of new property launches as a growing risk factor.

In Q3, 28.1 per cent of the developers expect new launches to increase moderately; 53.1 per cent expect new launches to hold at the same level in the next six months.

On unit price change, 43.8 per cent of the developers anticipate a moderate decrease in residential property prices in the next six months. As for Q3 alone, 46.9 per cent expect price to hold.

There is a little peep of silver lining, as close to 60 per cent of the respondents indicate that Brexit offers a good investment opportunity.

“The developers’ outlooks of the real estate markets are improving,” said associate professor Sing Tien Foo of NUS’s department of real estate in a media statement.

“However, they are concerned about the slowdown in global and local economics, which could bring potential downsides to the real estate market.”


Adapted from: The Business Times, 27 October 2016

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