Future Sentiment Index declined from 6.3 to 5.3 in 2Q
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It is believed that the Singapore property market witnessed mixed feelings in the second quarter according to the quarterly results from the Real Estate Sentiment Index (Resi) released by National University of Singapore Real Estate (NUS+RE).
Resi includes an Current Sentiment Index and a Future Sentiment Index, tracking changes in sentiments over the past and coming six months and the Composite Sentiment Index which is the indicator that derives from the general market sentiment.
For the quarter that ended in the 2nd quarter of 2018, in the second quarter, the Current Sentiment Index improved from 5.9 to 6.1 while the Future Sentiment Index declined from 6.3 to 5.3. Its Composite Sentiment Index decreased between 6.1 to 5.7 most likely due to an increase in global economic uncertainty according to the report.
“Though respondents are generally positive regarding the current outlook for the market but they are more beware of the market outlook in the coming six months to a year,” says Professor Sing Tien Foo the head of the Department of Real property at NUS.
Resi employs the “net balance percent” method to measure market sentiment. A positive net balance suggesting optimism, while negative balance indicating the opposite.
The entire real estate sector have maintained a positive net balance during the quarter that followed. The hotel/serviced apartments sector, which grew to 90% and registering the highest net balance of the quarter that followed. This was followed by the office sector as well as the industry/logistics sector with 53% and 57% respectively% respectively. The primary residential sector experienced the most growth, rising to 33% during the 2nd quarter. This was up from the -8% prior to that.
Looking ahead, all of the real estate sectors reported positive net future balances the second quarter of the year, though in a lower amount comparison to the previous quarter. The hotel/services segment again recorded the highest net balance for the future which was followed by the industrial/logistics and office sectors at +80% +43% and +27% in turn.
The results of the second quarter survey revealed that the 97% of respondents identified increasing inflation and rising interest rates as the most likely threat to negatively impact property market sentiment over the coming six months. The second risk that could be a concern is a slowdown of the world economy, as indicated by the 84% of the respondents. Risks of job losses and declines within the economy locally increased at 36.7%, up 12.8% from the prior quarter. Risks associated with the tight liquidity of the market for debt and the real estate prices increased throughout the quarter, too.
On the other hand worries about the cost of construction eased but it was still among one of the top four dangers.
The second quarter of the year of 2018, 44% of developers who were surveyed anticipated moderately higher numbers of units released within the coming six months. Around 12.5% of developers expected to see a significantly lower or moderately less amount of units that would be launched during the next six months. Of the developers of the survey, 64% were expecting new launches to be moderately or significantly more in the next six months and 31% anticipated prices for new launches to be similar and 6.3% expected prices to be significantly lower.