Property developers are less upbeat of the future, with nearly 34 percent of them expecting a decline in new home prices, according to the latest readings of Real Estate Sentiment Index (RESI).
Following the cooling measures announced on August 30, a third of developers polled for the third quarter expect less than 10 percent decline in prices for new residential launches over the next six months. None of the developers polled in the previous two quarters had expected price declines.
Only 44 percent of respondents expect more launches of new residential units over the next six months, down from 68 percent in Q2.
The sentiment indices slid below the significant mark of 5 in Q3, suggesting that respondents were less optimistic in the quarter and expect to see more uncertain market conditions over the next half year.
Polled on the future performance of the suburban residential sector, the net balance in Q3 stood at -43 percent. This means that most respondents expect a worse performance over the sector in the next six months. The net balance in Q2 hit +27 percent, suggesting better future performance.
“The strong historical price growth in the sector is not likely to be sustained moving forward. Downward adjustment to the price growth, if it occurs in the next few months, will ease some pressure on the affordability level of mass-market residential properties in suburban areas,” said Associate Professor Sing Tien Foo of NUS.
While the net balance for the prime residential sector’s future performance is still positive, it has been seeing significant decline, from 54 percent in Q1 to +32 percent in Q2 and +3 percent in Q3.
Around 70 percent of the respondents believe the government could further intervene to cool the property market.
They also cited several other factors that could affect sentiment over the next six months, including a slowdown in the global economy, an increase in the supply of development land, too many new property launches, rising interest rates and tightening financing/liquidity in the debt market.
About 84 percent of respondents expect a further increase in the supply of development land over the next six months, while 90 percent expect that the government will further ramp up the supply of BTO flats, DBSS flats and EC units.
About 76 percent and 64 percent expect that the recent property cooling measures will significantly affect the HDB resale and mass private housing market segments, respectively, over the next six months.