Developer sentiment has dampened significantly following the government’s announcement of new cooling measures, according to a survey conducted by the National University of Singapore (NUS) and the Real Estate Developers’ Association of Singapore (REDAS).
Outlook for the prime residential and suburban residential sectors were the hardest hit; office, business park/hi-tech space and hotel/serviced apartment were relatively unaffected.
REDAS and NUS had earlier completed a report on developer sentiment for Q2 of 2018, before the latest round of cooling measures were revealed on Jul 5.
A follow-up survey after the measures were introduced showed that the Real Estate Sentiment Index (RESI) took a dive from 6.6 to 3.9. According to REDAS, a score under five indicates deteriorating market conditions, while scores above five indicate improving conditions.
The RESI is a derived indicator of overall market sentiment, and comprises a Current Sentiment Index and a Future Sentiment Index.
The Current Sentiment Index, which measures respondents’ view of market conditions in the part six months, was revised downward from 6.7 to 3.9.
The Future Sentiment Index, which measures expectations for the next six months, fell from 6.4 to 4.0.
Post-measures, 65 per cent of the developers expected new launches to be higher, which is down from 87.9 per cent in 2Q18.
In 2Q18, 87.9 per cent of the developers expected new launches to be higher. But post-measures, this took a dip to 65 per cent.
Similarly, fewer developers expected there to be more new launches, with the proportion falling from 88 per cent to 64.8 per cent.
In terms of unit price change, developers were mostly sceptical of prices increasing, and more indicated that they would drop.
Only 13.5 per cent of the developers anticipated residential property prices to increase in the next six months after the cooling measures, compared to 81.8 per cent in 2Q18. In addition, 48.6 per cent of them expected prices to drop after the measures – an increase from only 3 per cent in 2Q18.