The latest Real Estate Sentiment Index (RESI) 1Q2023 published by NUS indicates that property buying sentiment in Singapore has dropped in 1Q2023 amidst high interest rates, a banking crisis in certain Western countries and a series of property cooling measures imposed in the city-state. This decline is reflected in a composite index, comprised of current and future sentiment, that dropped from 5.1 in 4Q2022 to 4.6 in 1Q2023.

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Professor Qian Wenlan, the Director of Institute of Real Estate and Urban Studies (IREUS) at NUS, explains that the recent property cooling measures, as well as the lack of willingness to reduce interest rates from the US Federal Reserve, have both contributed to the downtrend of sentiment since early 2022.

Despite this downward trend, the URA’s property price index has been surprisingly steady. IREUS also noted that recent launches are able to draw buying interest in spite of the additional buyer’s stamp duty (ABSD) increases.

Qian believes that there will be a “lead-lag effect” between the implementation of policies and its effects on the market. She added that the new launch market is starting from a fairly low base this year, and the performance of last quarter was not as impressive as in the past.

41% of the developers surveyed by IREUS expect a moderately or substantially larger number of units to be launched over the next six months. Nevertheless, Qian expects buyers to become increasingly cost-conscious due to the mounting cost of debt funding and other headwinds. On the other hand, demand may be shifted to public housing as the government expands the HDB supply pipeline.