The latest Real Estate Sentiment Index (RESI) report from the National University of Singapore (NUS) reveals a sharp improvement in property market sentiment for 3Q2024. The RESI, which reflects the prevailing confidence in Singapore's private real estate market, recorded a notable upswing across all key indices, marking a significant turnaround compared to the previous quarter.
The current sentiment index rose to 5.9 (from 4.8 in 2Q2024), while the future sentiment index climbed to 5.8 (from 5.1). The composite sentiment index also reached 5.9, up from 4.9. For the first time since 2019, all three indices crossed the neutral score of 5, signaling growing market optimism.
Key Drivers of Sentiment Growth
The positive sentiment was largely driven by two recent interest rate cuts by the US Federal Reserve in September and November — the first since 2019. These reductions have improved credit availability and lowered borrowing costs, providing relief to both homebuyers and developers.
Moreover, Professor Qian Wenlan, director of the NUS Institute of Real Estate and Urban Studies (IREUS), emphasized that further interest rate cuts are anticipated, which could sustain this optimism in the months ahead.
Additionally, the performance of specific property sectors like suburban residential properties, hotels/serviced apartments, and suburban retail has played a significant role in bolstering sentiment. Suburban residential properties, in particular, recorded the highest current net balance of +35%, indicating sustained demand for homes in these areas. Similarly, hotels/serviced apartments showed a future net balance of +35%, pointing toward growing interest in hospitality real estate investments.
Risks to Watch
Despite the improvements, uncertainties remain. According to the survey, 67.7% of developers view global economic decline as a key risk to the market. Other challenges include concerns over job losses, potential stagnation in the domestic economy, and the possibility of an excessive supply of new property launches, with 41.9% of respondents identifying these as areas of concern.
Summary Highlights:
- Market sentiment improved significantly in 3Q2024, with all RESI indices crossing the neutral mark of 5.
- Interest rate cuts by the US Federal Reserve are key contributors to the improved sentiment.
- Suburban residential properties and hospitality real estate sectors demonstrated strong performance, driving market optimism.
- Global economic risks remain the biggest challenge for developers, followed by concerns about job losses and oversupply.
Interpretation of the News:
This report showcases a positive shift in Singapore’s property market, supported by interest rate reductions and strong demand for certain property types. The improved affordability due to lower borrowing costs has energized homebuyers and investors alike, signaling a promising period for real estate transactions. However, caution is warranted as external economic risks and domestic uncertainties continue to linger.
Call to Action:
If you’re considering buying, investing, or right-sizing your property, now is the time to explore your options amidst improving market conditions. Connect with me for tailored advice on how to capitalize on this positive market momentum and stay updated on future opportunities. Let’s chart your property journey together!
Source: Property market sentiment improves in 3Q2024, boosted by interest rate cuts: NUS