A poll has revealed that homebuyers may have to brace for more expensive new private residential projects, as about 71% of developers expect a moderate or substantial increase in their unit prices over the next six months.
This is up from about 60% in the same survey conducted three months prior.
The Real Estate Sentiment Index (Resi) survey is published by NUS Real Estate, which represents the university’s Department of Real Estate and the Institute of Real Estate and Urban Studies (IREUS) at NUS.
Their latest Q1 2022 survey also showed that 24% of developers expect prices of new launches to maintain the same price level, while only 5% foresee a substantial decrease in prices.
In the Q4 2021 survey, 35% of developers had expected prices to remain unchanged.
In terms of future new project launches and sales, about 65% of the developers polled in the Q1 2022 survey expect to launch moderately more units in the next six months, while about 15% of developers expect a moderately lower number of units.
Meanwhile, rising construction costs, along with inflation and rising interest rates, were the top two potential risk factors for the next six months for nearly 95% of real estate executives.
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Compared to the previous quarter, the proportion of respondents who cited a global economic slowdown as a potential risk also saw the largest increase, rising from 44.7% to 79.5%.
Correspondingly, about 64% of respondents highlighted the tightening of financing and liquidity in the debt market as a potential risk, a slight decrease from 65.8% in Q4 2021. This figure was 32.6% in Q3 2021.
Government intervention for market cooling as a potential risk factor continued to decline, dropping from 39.5% in the previous quarter to 25.6% in Q1 2022. It was 62.8% in Q3 2021.
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The Composite Sentiment Index of the Resi study, a derived indicator of the overall real estate market sentiment, improved after Singapore reopened its borders and further relaxed its coronavirus safe management measures, rising from 5.4 in Q4 2021 to 6.1 in Q1 2022.
“However, the rise in inflation could be disruptive as the costs of oil and other raw materials increase,” said AnjiaSG senior real estate agent Leo Kwek, adding that rising interest rates will make mortgages and other forms of debt financing more burdensome.
“Real estate is often considered a good hedge against inflation. The positive impact from increased demand may offset the negative effects of government measures and uncertainty,” Mr. Kwek said.
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