Property market stabilises as industry players eye risk of government intervention

Property Market Stabilises as Industry Players Watch for Policy Intervention Risks

Singapore’s property market has continued to draw close attention in recent times. Buoyed by robust new private home sales in November last year and tailwinds from interest rate cuts, market sentiment was lifted, nudging local real estate sentiment indices upwards. However, the latest data indicates that this growth momentum has begun to moderate.

Sentiment Indices Inch Up as Momentum Slows

According to the latest Real Estate Sentiment Index (RESI) for the fourth quarter of 2024, published by the Institute of Real Estate and Urban Studies (IREUS) at the National University of Singapore (NUS), the Current Sentiment Index reached 6.2, up 0.3 quarter-on-quarter. Meanwhile, the Future Sentiment Index and Composite Sentiment Index both edged up by 0.1 to 5.9 and 6.0, respectively.

Notably, the sentiment index is scored on a scale from 0 to 10, where a rating above 5 reflects an optimistic market outlook, while a score below 5 indicates deteriorating conditions. While five consecutive quarters of growth suggest that overall market sentiment remains steady and positive, the easing pace may signal emerging uncertainties ahead.

Government Cooling Measures Deemed Top Potential Risk

The survey revealed that nearly 78% of industry respondents cited property cooling measures by the government as the biggest potential risk over the next six months—a sharp jump from 38% in the previous quarter. At the same time, the proportion of respondents who viewed inflation and interest rates as key risks climbed from 6.5% in the third quarter to 40.7%.

Additionally, 70.4% of surveyed players were concerned about the impact of a global economic slowdown, while 44.4% highlighted rising construction costs and credit tightening as potential risks. These figures underscore the market’s cautious stance towards future developments, with participants keeping a keen eye on any potential policy moves by the government.

Home Prices May Continue Rising Amid Expected Increase in Supply

Regarding price trajectories, 66.7% of developers anticipate new private residential prices to rise moderately over the next six months, marking a notable increase from 35.3% in the prior quarter. Concurrently, 80% of surveyed developers expect more project launches ahead, which will further augment market supply.

The final quarter of last year saw the rollout of several high-profile new launches, such as The Chuan Park and Emerald of Katong, with select projects setting benchmark pricing and driving up private home prices in the Outside Central Region (OCR).

Evolving Housing Demand May Reshape Market Dynamics

Demographic shifts in Singapore—including an ageing population, shrinking household sizes, and an increasing single population—are set to reshape domestic housing demand and could fundamentally alter prevailing supply-demand dynamics. Moving forward, market adjustments will not only hinge on short-term policy and macroeconomic factors, but will also be shaped by longer-term socio-structural trends.

On the whole, while the Singapore property market maintains an optimistic tone, industry players remain watchful regarding government cooling measures, the broader economic climate, and supply-side shifts. In the period ahead, the interplay between home price movements and regulatory policies will dictate the market's trajectory.