Property developers turn even more bearish as rates rise

Business sentiment deteriorated in Q4.

Business sentiment among property developers in Singapore took a hit in the fourth quarter of 2015 as jitters over higher interest rates gripped the market.

The latest Real Estate Sentiment Index (RESI) by the Real Estate Developers’ Association of Singapore (REDAS) and the National University of Singapore (NUS) dropped to 3.6 in the fourth quarter, compared to 3.7 in the preceding quarter.

“The rise in interest rate is expected to have adverse impact on buyers’ sentiment, as higher financing costs could put further downward pressure on private housing prices,” said NUS Associate Professor Sing Tien Foo.

Meanwhile, the future sentiment index, which measures respondents’ outlook for the next six months, declined to 3.4 in the fourth quarter from 3.7 in the third quarter.

All sectors showed negative current and future net balances during the period. Office, suburban residential and prime retail sectors were the three real estate sectors with the lowest net balances in Q4.

The office sector was the worst performing sector in the quarter, showing a current net balance of -43% and a future net balance of -67%.

Sentiments in the suburban residential sector showed a current net balance of -45% and a future net balance of -56% in Q4; while the prime retail sector showed a current net balance of -51% and a future net balance of -51% in the quarter.

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