National University of Singapore real estate (Department of Real Estate and Real Estate and Urban Research Institute collectively) released on Wednesday (August 30), the second quarter of this year's Real Estate Quotient Index (referred to as RESI) shows that the second quarter of the prime residential real estate current quotient percentage of the net value of minus 40 per cent, which means that a net 40 per cent of the respondents expressed pessimism about this area.
This net value is obtained by subtracting the percentage of optimistic respondents from the percentage of pessimistic respondents.
The net future sentiment of this sector is negative 28%, meaning that developers remain pessimistic for the next six months, while they are most optimistic about hotels, serviced flats and prime real estate, with a net future sentiment of 68% and 13% respectively.
Professor Qian Wenlan, director of the NUS Institute of Real Estate and Urban Studies, said in an interview that the pessimism of developers on prime residential property in the second quarter can be attributed to the fact that foreign buyers have to pay a hefty 60 per cent additional buyer's stamp duty after the Singapore government introduced cooling measures in April, as foreign buyers accounted for a sizable portion of demand for high-end real estate.
Geopolitical instability and the global economic slowdown added to the uncertainty, and Singapore's implementation of a new round of property cooling measures in April this year added more variables to the market, with the Composite Sentiment Index, which reflects the overall property sentiment, remaining flat at 4.6 in the second quarter.
92.5 per cent of developers who participated in the survey cited the global economic slowdown as the most significant risk, while 72.5 per cent of respondents pointed to high inflation and interest rates as another major factor. In addition, 60 per cent of developers cited market cooling measures as a major factor, up from 54.5 per cent in the first quarter.
The report disclosed that the Current Market Index remained at 4.7 in the second quarter, while the Future Market Index showed a slight increase to 4.6 from 4.5 in the first quarter, but was still lower than the 4.9 in the fourth quarter of last year.
The index is scored on a scale of 0 to 10, measuring the degree of optimism or pessimism of the surveyed traders towards the market; an index of more than 5 means that the market is optimistic, while an index of less than 5 means that the market is deteriorating.
According to Chin Man Lan, the recently announced regulations for the pre-purchase of HDB flats in Preferred (Plus) and Prime (Prime) lots are expected to improve the supply and affordability of the overall housing market, which in turn will moderate prices across the board.
"Active investment activity, driven by bullish sentiments, has contributed to price increases, so when (Singapore's) government policies steer homebuyers towards homeownership and away from homes as an asset class, we expect prices to soften in the long term."
