Property market sentiment highest in seven years: NUS-REDAS index

Overall sentiment for the real estate market stood at 6.6 in 3Q2017, a 0.5 point increase q-o-q from 6.1 in 2Q2017, and the highest since 1Q2010 when it was 6.8, according to the Real Estate Sentiment Index (RESI) released by the National University of Singapore and the Real Estate Developers’ Association of Singapore (REDAS).
Both the indices reflecting current and future sentiment rose from 2Q2017, continuing the uptrend from 4Q2015.
Each quarter, NUS and REDAS holds a survey among senior executives of REDAS member firms to measure real estate market sentiment in Singapore. A score above 5 indicates improving conditions.
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Property market sentiment is improving
The survey also found that respondents seemed optimistic about the ongoing collective sale fever even amid DC rate hikes. While 36.1%, 31.7% and 30.0% of respondents expected the revision of DC rates to have significant impact on pricing of en bloc sales, development costs, as well as the number of en bloc sales, 60.9% of respondents felt the hike will not curb the collective sale fever.
Reasons given were the “extreme” prices for Government Land Sales (GLS) sites, depleted land bank of developers and the believe that DC rates will be factored into collective sale prices eventually.
Respondents were most confident in the suburban residential sector, and were least optimistic about the prime retail sector.
57.4% of respondents indicated expected economic slowdown as the greatest risk to market sentiment in the next six months, while 50.8% expect adverse impact from rising interest rates. 34.4% also deemed excessive supply of new property launches as a potential risk.
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50.0% of surveyed developers expect a moderate increase in new launches over the next half-year, with only 5.6% of them indicating that they will launch moderately less units in the time period, compared to 8.6% in 2Q2017.