More expect government intervention to cool property market
Singapore
FEARS of spiking construction costs overtook economic woes as the top potential risk factor that may temper sentiment in the property sector in the next six months.
That is according to the latest Real Estate Sentiment Index published by the National University of Singapore Real Estate (NUS+RE), which represents the Department of Real Estate and the Institute of Real Estate and Urban Studies at the university.
The quarterly survey polled about 40-50 senior executives in the real estate sector who are closely following the pulse in the markets.
The proportion of respondents who indicated concerns on the rising costs of construction rose to 85.1 per cent in the fourth quarter of 2020, versus 76.9 per cent in Q3.
"Construction costs are expected to increase in the next six months due to shortage of manpower, supply disruptions of building materials and tighter regulations imposed on construction sites," one respondent said.
"This could potentially lead to persistent demand-supply mismatch in the near term."
In contrast, the proportion of respondents who indicated job losses/a decline in domestic economy as a potential risk factor fell to 61.7 per cent from 100 per cent, while those who were worried about the slowdown in the global economy declined to 76.6 per cent from 96.2 per cent.
Meanwhile, one risk factor that rose significantly was the potential risk of government intervention to cool the market, which jumped to 44.7 per cent in Q4 2020, from just 19.2 per cent in Q3 2020.
The other was the possible risk of a real estate price bubble/excessive speculative activities which increased to 25.5 per cent, from 5.8 per cent in Q3.
In terms of future launches and sales, about 58 per cent of property developers surveyed by NUS+RE expected prices to be moderately higher, while 29 per cent expected prices to remain the same.
To add to that, about 54 per cent of developers expected the number of units to come to the market to be moderately or substantially more in the next six months.
Despite the pandemic's impact on the economy, market sentiment for the second half of last year has remained optimistic.
The study's composite sentiment index, a derived indicator for the overall real estate market sentiment, continued to climb upwards to 6.5 in Q4 from 5.4 in Q3, indicating an optimistic outlook on the market heading into 2021, NUS+RE noted.
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