Sentiment within the real estate market has been hit hard by various cooling measures implemented by the government, with industry players anticipating an unfavourable business climate for the rest of the year.
A net weighted balance of 41 per cent of property firms surveyed by the Department of Statistics expect business to slow down in the second half of the year, due to the recent implementation of the Total Debt Servicing Ratio (TDSR) framework.
Under the framework, which took effect on June 29, financial institutions must ensure a borrower’s property loan does not push an individual’s total debt obligations to over 60 per cent of his or her monthly income.
Despite industry players’ concerns, the current market climate remains relatively upbeat, as evidenced by the recent bullish bids for residential sites, said Mr Colin Tan, Director and Head of Research and Consultancy at Suntec Real Estate Consultants.
A private housing site at Tampines Avenue 10 attracted 10 bids last month, with the tender going to MCC Land at S$289.7 million, or about S$562.01 per square foot per plot ratio. In another example, the top bid for an Executive Condominium site in Jurong hit a record S$418.53 psf ppr, exceeding the previous high of S$392.45 psf ppr. The tender for the site received 16 bids.
“People may take longer to sort out administrative matters because of the measures, but I don’t think (buying) interest has waned,” Mr Tan added.
Sentiment in the services industry, however, remains positive. Within the sector, the accommodation industry seemed the most upbeat, with hoteliers encouraged by potentially higher occupancy during the coming Formula 1 event and year-end festive period, said the Department of Statistics.
Meanwhile, manufacturers also foresee a more favourable business climate in the second half, despite lingering concerns about the global macro-economic environment, reported an Economic Development Board survey. All clusters, except biomedical manufacturing, anticipate production increasing in the third quarter.
“(The optimism) gels quite well with our expectations that industrial production figures will see improvement in the second half of the year,” said UOB economist Francis Tan.
Source : Today – 1 Aug 2013