As the Market Heats Up, Developers Fear Fresh Cooling Measures

60% of Developers Fear Potential New Cooling Measures, with Job Losses Seen as Top Downside Risk

Sentiment in the Singapore real estate market continued to rebound in the third quarter of this year, though developers' concerns have also escalated concurrently. According to the Q3 2025 Real Estate Sentiment Index (RESI) published on Monday by the Institute of Real Estate and Urban Studies at the National University of Singapore (NUS IREUS), despite improvements in overall market sentiment, 60% of surveyed developers anticipate the government could step in with fresh cooling measures over the next six months, marking it as their foremost risk factor.

The report revealed that the Composite Sentiment Index rose to 6.1 in the third quarter, up from 5.7 in the second quarter, signalling a tangible recovery in overall market confidence.

The Future Sentiment Index also nudged up slightly to 6.0, reflecting sustained optimism regarding the market outlook over the coming six months. The research team noted that easing financial conditions and resilient local macroeconomic fundamentals were the primary drivers underpinning this quarter's rebound in confidence.

However, amid this optimism, apprehension is deepening. Survey findings show that 60% of developers believe the likelihood of government intervention via fresh property cooling measures is rising—a noticeable jump from 42.3% in the second quarter, making it the fastest-growing risk factor this quarter.

Additionally, roughly 75% of respondents expressed concern over potential job losses or an economic slowdown, while over half cited escalating construction costs as a major worry. In contrast, only a handful of respondents highlighted risks such as increased land supply, an oversupply of projects, or asset bubbles, underscoring the prevailing view that core market fundamentals remain sound.

Experts pointed out that Singapore's economic fundamentals remain robust. Inflation has largely stabilised, real wages grew by 3.2% in 2024, and the third-quarter unemployment rate held steady at just 2.0%, anchoring the property market's healthy trajectory on both the employment and wealth fronts.

With the Future Sentiment Index standing at a healthy 6.0, it indicates that surveyed developers remain sanguine about credit access and capital costs.

Developer sentiment has also improved noticeably regarding funding and financing. Only around 10% of respondents voiced concern over rising inflation and interest rates, down sharply from 23.1% in Q2. Those viewing tighter liquidity and financing constraints as a key risk fell from 15.4% in the previous quarter to just 5%. Concurrently, anxieties over a global economic slowdown moderated from 80.8% to 70%.

Backed by this revival in confidence, developers are showing a stronger appetite to roll out new projects. Seventy per cent of surveyed developers expect more new launches to enter the market over the next six months, a marked increase from 56.2% in Q2.

Regarding home price trends, half of the respondents foresee modest price increases over the next half-year, while the other half anticipate prices to hold firm; notably, none expect property prices to drop. One respondent observed: "Projects in prime, tightly-held locations that have seen a protracted dearth of new supply could command higher prices; conversely, for developments facing stiffer competition, developers are likely to adopt more measured pricing strategies to drive take-up."

Nevertheless, lingering cost pressures continue to cast a shadow over developers despite rising confidence. The survey highlighted that 90% of respondents identified rising labour costs as their single biggest operational challenge, followed closely by spikes in building material and land costs, both cited by 80% of developers.

Furthermore, 70% pointed to escalating professional fees, while half remained concerned about financing costs. These cost overheads could constrain developers' pricing flexibility moving forward.

Across asset classes, developers are most bullish on the outlook for prime residential properties, followed by hotels, serviced apartments, and suburban private homes. The least favoured sectors were industrial and logistics real estate. Notably, sentiment towards the office sector turned positive for the first time after two years in negative territory, signalling a steady recovery in office space demand.

Overall, bolstered by easing financial conditions, a resilient economy, and stable employment, sentiment in Singapore’s property market continues to mend, even as developers stay keenly mindful of potential downside risks. The research team cautioned that external geopolitical uncertainties remain elevated, advising both developers and home buyers to stay rational and prudent when committing to major financial decisions.

Singapore’s property market remains fundamentally resilient; this balance of confidence and caution may well reflect the healthiest dynamic for the market today.