ST : Property firms less upbeat with market set to cool

Oct 29, 2010
Property firms less upbeat with market set to cool
Sentiment index for the next six months drops slightly following Govt's recent curbs
By Harsha Jethnani

PROPERTY companies are less optimistic about market conditions in the next six months, following the Government's introduction of cooling measures in August.

According to the third-quarter Real Estate Sentiment Index (Resi), the future sentiment index - which gauges sentiment about the next six months - dropped to 4.8 from 5.9 in the second quarter of the year.

Released yesterday, the quarterly questionnaire survey developed by the Real Estate Developers' Association of Singapore (Redas) and the National University of Singapore's Department of Real Estate (NUS DRE) polled 71 Redas members, of which 61 per cent were developers.

Although slightly less upbeat, developers did not expect the market to weaken significantly over the next six months, the survey found.

But fewer of them expected more new residential units to be launched in the next six months - 44 per cent as compared to 68 per cent in the second quarter of this year.

On prices, those questioned suggest levels will moderate over the coming months.

More than half - 54 per cent - anticipated residential prices remaining unchanged over the next two quarters, and 34 per cent saw them becoming moderately lower. Just 12 per cent thought they would rise, compared to 51 per cent when the survey was last conducted in June.

In a statement released yesterday, Associate Professor Sing Tien Foo of the NUS Department of Real Estate said 'the strong historical price growth is not likely to be sustained moving forward'.

Resi's composite sentiment index - an indicator of overall market sentiment - also dropped to 4.8 from 5.9, indicating that respondents were less upbeat and expected more uncertain market conditions over the near term.

The survey found that respondents were negative about prospects for the suburban residential market, expecting it to perform less well over the next six months.

The sector had a 'net balance percentage' of minus 43 per cent.

This figure indicates the overall direction of change in sentiment according to the Resi report.

Some 76 per cent of respondents anticipated that recent government measures would have a significant impact on the HDB resale market over the next half-year, and 65 per cent thought they would hit mass-market private housing. About 45 per cent of developers did not expect to see a change in the level of interest in government land sale (GLS) sites and collective sales, but 47 per cent thought interest for government land sale sites would reduce over the next six months, compared to 24 per cent in the last quarter.

About 33 per cent of developers anticipate less interest in collective sales, compared to 15 per cent in the previous quarter.

Redas chief executive Steven Choo said the divergent views reflected short-term uncertainty about market movements, 'but by and large, the development industry is expected to stay on course to meet demand in the housing market'.

harshamj@sph.com.sg