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Real Estate Sector

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The supply from new releases is identified as one of the downside risks.

Real estate developers in Singapore remain largely pessimistic over their expectations for the property market in 2019 amidst local financial uncertainties like tight competition, international headwinds and an surplus supply from en bloc sales, according to responses to the Real Estate Sentiment Indicator (RESI).

Therefore, the overall opinion stood at 4.3 in Q4, 0.3 higher compared to Q3, representing how sentiments are recovering from the consequences of these cooling measures imposed by the authorities in July 2018, the report noted.

“In Q4 2018, the economists identified decline in the worldwide market, rising inflation and interest rates and excess supply of new property launches as the top three possible risk factors that may adversely affect the market sentiment in the next six months,” the parties added.

That having been said, 45.2% of programmers surveyed indicated they would substantially increase their new launches, whilst 38.7% said they would moderately do so, the report emphasized. Only 6.5percent of those respondents said that they launch moderately less in the next six months.

By sector, the office market was observed since the strongest with the current and internet balances standing at 46% and 48%, respectively in Q4 2018.

Serviced apartment business and the hotel came in with future internet accounts of 28% and 20 percent second. However, residential sectors and the prime were the markets with a current balance of -48% and -49%, respectively.

In terms of unit price change, nearly a third or 29 percent of the programmers expect residential property costs to moderately increase in the forthcoming months, whilst 45.2% expected prices to stay at unchanged. A quarter or 25.8% predicted a moderate drop in costs, on the other hand.

“Based on the responses, local and foreign investors are most likely to be affected by greater Additional Buyer’s Stamp Duty (ABSD) that will significantly increase transaction costs of investors when purchasing the second and subsequent homes,” the parties commented. They included that the tighter loan limit will influence price-sensitive Housing and Development Board (HDB) upgraders and personal possessions more compared to foreign investors.

“The higher ABSD measure impacts en bloc property owners over the tighter loan limitation measure because greater ABSD incurred when purchasing a replacement home will reduce the en bloc sale profits,” they further explained.

Nearly all or 95.1% of respondents reasoned that July’s cooling measures will continue to impact the property market in 2019, together with around 82% mentioning the en bloc market is going to likely be hit hard in the coming months. A bit over half (50.8percent ) are optimistic the government will not introduce further cooling measures in 2019.

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