Property Market Sentiment Improves 3Q2024 Boosted Interest Rate Cuts Nus
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In the third quarter of 2024, the sentiment towards property buying in Singapore has seen a positive shift, according to the recent Real Estate Sentiment Index (RESI) released by the National University of Singapore (NUS).
The RESI, which surveys senior executives of real estate firms, measures the overall sentiment of the private real estate market on a quarterly basis. Conducted by NUS’s Department of Real Estate and the NUS Institute of Real Estate and Urban Studies (IREUS), the latest index shows a significant increase from 4.8 in the second quarter to 5.9 in the third quarter.
The future sentiment index also saw a growth, rising from 5.1 in Q2 to 5.8 in Q3. Additionally, the composite sentiment index, which combines both current and future sentiment, rose to 5.9 from 4.9 previously. This is the first time that all three indices have surpassed the neutral score of 5, indicating a growing optimism in the overall market.
IREUS director Professor Qian Wenlan attributes this positive sentiment to the recent rate cuts by the US Federal Reserve in September, the first one since 2019, and another reduction in early November. She expects that with more cuts anticipated in the coming months, it will lead to an improvement in credit availability and the costs of doing business, ultimately boosting market sentiment.
Professor Sing Tien Foo, Provost’s Chair Professor at the NUS Department of Real Estate, also notes the positive performance of suburban residential, hotel/service apartments, and suburban retail areas, which have contributed to the overall market sentiment. According to the current net balance, suburban residential and hotel/service apartments have seen the highest scores of +35%, followed by suburban retail at +26%. The future outlook for these sectors is also promising, with suburban residential scoring +29% and hotel/service apartments and suburban retail scoring +35% and +19%, respectively.
However, global economic uncertainty remains the top risk concern for developers, with 67.7% of respondents indicating a decline in the global economy as a potential risk. This is followed by job losses, a decline in the local economy, and an oversupply of new property launches, with both risks ranking at 41.9%.