Property market sentiment improves in 3Q2024, boosted by interest rate cuts: NUS

SINGAPORE (EDGEPROP) – Property buying sentiment in Singapore has turned a corner in 3Q2024, according to the latest Real Estate Sentiment Index (RESI) published by the National University of Singapore (NUS).

The RESI measures the general prevailing sentiment of the private real estate market performance by surveying senior executives of real estate firms. It is measured quarterly by NUS’s Department of Real Estate and the NUS Institute of Real Estate and Urban Studies (IREUS).

The current sentiment index grew from 4.8, recorded in 2Q2024, to 5.9 in 3Q2024. The future sentiment index also rose, climbing from 5.1 in 2Q2024 to 5.8 in 3Q2024.

Meanwhile, the composite sentiment index grew to 5.9, up from 4.9 in 2Q2024. This is the first time that all three indices have gone above the neutral score of 5, which IREUS attributes to a growing optimism in the market at large.

IREUS director Professor Qian Wenlan attributes the positive sentiment to the US Federal Reserve rate cut in September — the first since 2019 — and another reduction in early November.

“With more cuts anticipated in the months ahead, we expect both credit availability and the costs of doing business to improve, which would, in turn, raise market sentiment,” she says.

Professor Sing Tien Foo, Provost’s Chair Professor at the NUS Department of Real Estate, observes that the positive performance of the suburban residential, hotel/service apartments, and suburban retail areas also propped up the general market sentiment.

Suburban residential and hotel/serviced apartments recorded the highest current net balances of +35%, followed by suburban retail (+26%).

The outlook for these sectors was also positive, with suburban residential scoring +29% for future net balance, while hotel/serviced apartments and suburban retail scored +35% and +19%, respectively.

However, Prof Sing notes that global economic uncertainty remains the top risk concern of developers, with 67.7% of respondents indicating a decline in the global economy as a potential risk. This is followed by job losses, a decline in the domestic economy, and an excessive supply of new property launches, both of which ranked at 41.9%.