Nus Real Estate Survey Points Improving Market Sentiment Among Industry Leaders

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According to the most recent Real Estate Sentiment Index (RESI) by the National University of Singapore (NUS), the local real estate market has shown signs of improvement in the first quarter of 2024, following a positive turn in the last quarter of 2023. This quarterly survey, conducted by the university’s Department of Real Estate and the Institute of Real Estate and Urban Studies, measures the sentiments of senior executives from real estate firms. It is divided into two sections: the Current Sentiment Index and the Future Sentiment Index, which reflect changes in market sentiments over the past and the next six months, respectively.The first quarter of 2024 saw an increase in the current sentiment index to 4.7, up from 4.4 in the previous quarter. Additionally, the future sentiment index rose above the neutral score of 5.0 for the first time in five months, reaching 5.1.Read also: Singapore Property Buying Sentiment Declines in 1Q2023 Due to High Interest Rates and Cooling Measures: NUSIn a statement, Professor Qian Wenlan, director of the NUS Institute of Real Estate and Urban Studies, said, “Overall, Singapore’s macroeconomic indicators are holding up well, which, barring unforeseen shocks, point to a healthy economy that could recover over the year ahead.” Wenlan also noted that the strong Singapore dollar has helped to ease inflation, with core inflation dropping to 3.1% year-on-year in March from 3.6% in February, and headline inflation decreasing to 2.7% year-on-year in March from 3.4% in February.One survey respondent cited “healthy household balance sheets and the prevailing low unemployment level” as factors that would continue to support demand and prices in the housing market. According to NUS, the net worth of households grew by 8.9% in 2023 to reach $2.80 trillion, up from $2.57 trillion the previous year, while the unemployment rate remained low at about 2%, in line with the declining rate of retrenchments in the first quarter of 2024.Industry leaders in the real estate sector maintain a positive outlook on the local hotel and serviced apartment segment, followed by a relatively less optimistic outlook on the suburban retail sector. However, survey respondents had a negative outlook on the overall performance of the prime residential market.In addition, 73.5% of respondents in the first quarter of 2024 survey stated that a slow-down or decline in the global economy was the top potential risk that could adversely impact sentiments over the next six months, a considerable decrease from 90% in the third quarter of 2023.Read also: Prolonged Inflation and Elevated Interest Rates Continue to Dampen Sentiments, Says NUS Real Estate”Economic recovery is an important factor in the health of the property market. We are also concerned with the potential oversupply of residential apartments as the government increases the Government Land Sales (GLS) supply over the last few quarters. Potential cooling measures are always a concern,” cited one survey respondent.About 29.4% of respondents expressed concerns about the increasing supply of development land, an increase from 23.7% in the previous quarter. Job losses and a decline in the domestic economy remained the second-highest area of concern at 55.9%, slightly lower than 57.9% in the previous quarter. Rising inflation and interest rates followed at 50.0%, up from 44.7% in the fourth quarter of 2023.The risk of government intervention in the market and the potential for a real estate price bubble were ranked the lowest, at 11.8% and 2.9%, respectively.Moving forward, 22.2% of developers surveyed expect unit prices of new launches in the next six months to be moderately higher, down from 42.9% in the fourth quarter of 2023. On the other hand, 72.2% anticipate that new launch prices will remain at the same level, a significant increase from 47.6% in the previous quarter. The remaining 5.6% expect unit prices to be moderately lower.One survey respondent said, “Home buyers have become more resistant to high price points and are more discerning due to the ample new project options available. While developers are expected to adopt sensitive pricing strategies, major price corrections are unlikely due to previously committed land and development costs.” The respondent added that healthy household balance sheets and the prevailing low unemployment level are also expected to continue supporting demand and prices.Read also: NUS SRPI: Private Non-Landed Private Residential Price Index Up 0.3% Month-on-Month in November.