NUS-Redas property sentiment index plummets in 3Q2018

/ EdgeProp Singapore
October 24, 2018 10:58 AM SGT
Property sentiment, as measured by the NUS-Redas Real Estate Sentiment Index (RESI), took a big knock in 3Q2018. This arose from the new round of property cooling measures implemented in July. The Composite Sentiment Index, which is an indicator for the overall real estate market sentiment, tumbled to 4.0 in 3Q2018 from 6.6 in 2Q2018.
The Current Sentiment Index -- which tracks changes in sentiments over the past six months -- decreased to 4.0 in 3Q2018 from 6.7 in 2Q2018; and the Future Sentiment Index -- which follows sentiment change over the next six months -- decreased to 4.2 in 3Q2018 from 6.4 in 2Q2018.
Associate Professor Sing Tien Foo, of NUS Institute of Real Estate and Urban Studies, says: “The uncertainties in the external economic conditions coupled with the high transaction costs imposed by the new ABSD [additional buyer’s stamp duty] policies may have double whammy impact on the local residential markets.” The sharp declines in the 3Q2018 sentiments reflect the “bleak outlook” of the property players, especially on the residential markets in the next 6 to 12 months, he adds.
RESI measures the perceptions and expectations of real estate development and market conditions in Singapore. The index was jointly developed by the Real Estate Developers’ Association of Singapore (Redas) and the Department of Real Estate (DRE), National University of Singapore. RESI comprises the Current Sentiment, Future Sentiment and Composite Sentiment indexes.
The RESI survey found that for the prime residential sector, the current and the future net balances slumped from 63% and 58% in 2Q2018 to -58% and -45% in 3Q2018, respectively. The current and the future net balances for the suburban residential sector declined from 53% and 37% in 2Q2018 to -60% and -45% in 3Q2018. The “abrupt changes” in respondents’ sentiments reflect pessimistic outlook in the residential sectors, according to the survey.
In 3Q2018, the office sector was the strongest among the sectors surveyed, with both current and future net balances at 45%. The retail sectors, particularly prime retail, put up a slightly worse performance. At 33% and 31%, the hotel and serviced apartment sectors saw improved current and future net balances, compared to 19% and 16% in 2Q2018, respectively.
On the impact of the ABSD measures in the next 6 months, 90.2% of survey respondents felt that the en bloc market would be “seriously affected”. 63.9% of the respondents expect the ABSD hike to greatly...