BT: Jittery developers go low-rise on confidence

BT: Jittery developers go low-rise on confidence
By KALPANA RASHIWALA

The worst- kept secret in the property market is out in the open. Not only are developers less upbeat about the future but a third of them actually expect prices of new homes to decline. And market performance for the suburban residential sector may be the worst hit.

This dose of pessimism was reflected in the latest readings of Real Estate Sentiment Index (RESI) put out by the developers body and NUS.

In the wake of the Aug 30 cooling measures, some 34 per cent of developers polled for Q3 expect prices for new residential launches to decline, albeit by less than 10 per cent, over the next six months. None of the developers surveyed in Q1 and Q2 had predicted price drops.

Just 44 per cent expect more new residential units to be launched over the next half year, down from 68 per cent in the previous quarter.

The sentiment indices slipped below the psychologically significant mark of 5 in Q3, indicating respondents were less upbeat in the quarter and expect more uncertain market conditions over the next six months.

The consensus as indicated by net balances is generally weaker.

Polled on how the suburban residential sector would perform, the net balance in Q3 was -43 per cent. This means that most expect the sector to perform worse over the next six months. In Q2, this net balance was +27 per cent, hinting at better future performance.

'The strong historical price growth in the sector is not likely to be sustained moving forward. Downward adjustment to the price growth, if it occurs in the next few months, will ease some pressure on the affordability level of mass-market residential properties in suburban areas,' said Associate Professor Sing Tien Foo of NUS.

The net balance for the future market performance of the prime residential sector, while still in positive territory, has also been declining significantly, from +54 per cent in Q1 to +32 per cent in Q2 and +3 per cent in Q3.

About 70 per cent of the developer respondents in the latest survey were concerned that the government could intervene to dampen the property market further.

They also cited other factors that could hurt sentiment over the next six months. The concerns included a slowdown in the global economy (cited by 60 per cent), an increase in the supply of development land (53 per cent), too many new property launches (49 per cent), rising interest rates (47 per cent) and tightening financing/liquidity in the debt market (40 per cent).

Eighty-four per cent of all survey respondents consider it likely and very likely that there will be a further increase in the supply of development land over the next six months. An even higher proportion, 90 per cent, of respondents expect the government to further boost the supply of Build-to-Order and Design, Build and Sell Scheme public housing flats as well as executive condo (EC) units.

Recent government steps to cool the market are expected to have most impact on the HDB resale and mass private housing market segments. About 76 and 64 per cent respectively of survey respondents rated their impact on these two market segments over the next six months as significant. Conversely, the measures are expected to have the least impact on the high-end/luxury segment with 64 per cent predicting minimal impact. For the mid-end private housing segment, 79 per cent foresee only moderate impact.

Real Estate Developers' Association of Singapore and NUS' Department of Real Estate polled slightly over 70 respondents for their latest Q3 survey, similar to the size for the Q1 and Q2 surveys.

The Current Sentiment Index, where respondents are asked to rate overall Singapore real estate market conditions now compared with six months ago, fell from 5.8 in Q2 to 4.8 in Q3.

The Future Sentiment Index, where respondents rate overall property market conditions over the next six months, also slipped from 5.9 in Q2 to 4.8 in Q3. As a result, the Composite Sentiment Index (the average of the two indices), also declined to 4.8. The index ranges from 0 to 10 with a score below 5 indicating deteriorating market conditions.

Redas CEO Steven Choo said: 'The RESI was able to track closely the immediate impact the cooling measures has on sentiments in the property sector.'

Agreeing, Knight Frank chairman Tan Tiong Cheng said: 'The findings are not surprising. Just look at the amount of land government has been releasing and the supply of new HDB flats and ECs they're planning, plus the demand-side measures. People have put on their thinking caps to figure out how they'll be affected, whether they are HDB upgraders, buying a second/investment property, or even downgrading.

'The latest survey results are a clear signal to government that the measures are having an impact,' he added.

Separately, the NUS' Institute of Real Estate Studies yesterday released its monthly Singapore Residential Price Index tracking prices of completed non-landed private homes. The overall index rose one per cent month on month in September, slightly slower than the 1.1 per cent increase in August.

NUS' sub-index for Central region, which covers a basket of properties in districts 1-4 and 9-11, increased 0.6 per cent in September, the same pace as in August. The sub-index for Non-Central region appreciated 1.4 per cent in September, slightly slower than the 1.6 per cent gain posted in August.

Farrer Road straightens!

ST: Farrer Road straightens out as MRT work ends 

By Christopher Tan

Farrer Road is back to its original alignment after six years of twisty diversions necessary for construction of the Circle Line.

The busy thoroughfare has not only been straightened, but has also been widened. It now has four lanes each way, up from three.

With that, the traffic bottleneck which has been the bugbear of motorists since the construction started in 2004 has been removed.

'There should be significant improvement to traffic flow,' said retired traffic planner Joseph Yee, 65.

Farrer Road is part of the $400 million Outer Ring Road System, which currently allows motorists to travel over 20km from Tampines to Queensway with only two traffic lights along Lornie Road.


Workers were seen putting the finishing touches to the Farrer Road MRT station exterior last week.

The station is part of the remaining two stages of the Circle Line which will open by the middle of next year. The stages link Marymount to HarbourFront, passing places like the Botanic Gardens and Holland Village along the way.

A Land Transport Authority (LTA) spokesman said all 12 of the completed stations along this stretch are expected to achieve temporary occupation permits by the end of this year.

'The stations will then be architecturally fitted with electrical and mechanical works,' she added.

The Farrer Road station has one unique feature: a pedestrian overhead bridge with lifts at both ends.

This is to allow pedestrians to cross the road after train service hours, when the underground station - which forms an underpass across Farrer Road - is closed.

The LTA, however, said the bridge is not part of a plan currently under study to erect overhead bridges with lifts at selected MRT stations. It said that study had not been completed.

Ms Lee Bee Wah, an MP for Ang Mo Kio GRC, who has been lobbying for such facilities for three years now, hopes they will be built.

'I really hope they'll do it, especially if we want to encourage our senior citizens to be active and take public transport,' she said.

Two other roads diverted by Circle Line works - Holland and North Buona Vista - are expected to return to their original alignment in the next few weeks.