reporter2
02-10-17, 18:57
Singapore home prices seen reversing after a long downward trend
Sep 29, 2017
Rachel Mui
FOR the first time in four years, more analysts seem to be agreeing that the Singapore property market is at an inflection point, and on the cusp of recovery.
In a report on Thursday, OCBC Investment Research noted that the Urban Redevelopment Authority's (URA) third-quarter price index is poised to rebound, marking the end of the Singapore housing bear. The URA's flash estimate will be announced next Monday, with official statistics to be released on Oct 27.
Said OCBC analysts: "We believe that the trough is in fact behind us and Singapore home prices likely hit cyclical lows in mid-June 2017."
They cited three reasons for their view. First, the URA had previously revised its second-quarter figures upwards from the flash estimate of -0.3 per cent to the official statistic of -0.1 per cent.
This represents the smallest decline in 15 consecutive quarters of falls, signalling that an upcycle is in sight. Given firm market conditions, OCBC expects this upward trend to have continued into Q3 2017.
Secondly, sales volumes and take-up rates in the primary housing market strengthened in July and August this year. Total new home sales rose 35 per cent year on year to 3,672 units in these two months, while the take-up rate (total sales over total launches) surged to 193 per cent from 131 per cent over the same period from a year ago.
Thirdly, OCBC's research suggests that price expectations of developers and home sellers in the secondary market increased over the past few months, with the prices of new launches inching up simultaneously.
Taken together, OCBC analysts are forecasting for Singapore home prices to be overall flat in 2017, and to appreciate by 3 to 8 per cent in 2018, as the rental market picks up and macroeconomic conditions remain robust.
The report maintained the analysts' "overweight" rating for the property sector, with their top picks being City Developments, UOL Group and Wheelock Properties.
Interestingly, it's not just OCBC that's foreseeing a reversal from a long downtrend of residential prices in Singapore.
Earlier this month, Morgan Stanley said that a recovery in local housing prices has begun in the third quarter, with its analyst Wilson Ng predicting that private home prices will add 10 per cent by the end of 2018, and double by 2030.
Similarly, UOB Kay Hian envisage that Singapore property prices will rise by 5 to 10 per cent next year after bottoming out this year.
"Historically, spikes in en bloc sales have preceded property sector price recovery in the past cycles in 2007 and 2011," UOB said.
It added that the levelling of taxation costs and cooling measures are building up the relative appeal of Singapore real estate. As such, they expect this nascent recovery to spread to the mid-range and high-end segments, driven by an en bloc fever and strong buyer sentiment from foreigners.
Sep 29, 2017
Rachel Mui
FOR the first time in four years, more analysts seem to be agreeing that the Singapore property market is at an inflection point, and on the cusp of recovery.
In a report on Thursday, OCBC Investment Research noted that the Urban Redevelopment Authority's (URA) third-quarter price index is poised to rebound, marking the end of the Singapore housing bear. The URA's flash estimate will be announced next Monday, with official statistics to be released on Oct 27.
Said OCBC analysts: "We believe that the trough is in fact behind us and Singapore home prices likely hit cyclical lows in mid-June 2017."
They cited three reasons for their view. First, the URA had previously revised its second-quarter figures upwards from the flash estimate of -0.3 per cent to the official statistic of -0.1 per cent.
This represents the smallest decline in 15 consecutive quarters of falls, signalling that an upcycle is in sight. Given firm market conditions, OCBC expects this upward trend to have continued into Q3 2017.
Secondly, sales volumes and take-up rates in the primary housing market strengthened in July and August this year. Total new home sales rose 35 per cent year on year to 3,672 units in these two months, while the take-up rate (total sales over total launches) surged to 193 per cent from 131 per cent over the same period from a year ago.
Thirdly, OCBC's research suggests that price expectations of developers and home sellers in the secondary market increased over the past few months, with the prices of new launches inching up simultaneously.
Taken together, OCBC analysts are forecasting for Singapore home prices to be overall flat in 2017, and to appreciate by 3 to 8 per cent in 2018, as the rental market picks up and macroeconomic conditions remain robust.
The report maintained the analysts' "overweight" rating for the property sector, with their top picks being City Developments, UOL Group and Wheelock Properties.
Interestingly, it's not just OCBC that's foreseeing a reversal from a long downtrend of residential prices in Singapore.
Earlier this month, Morgan Stanley said that a recovery in local housing prices has begun in the third quarter, with its analyst Wilson Ng predicting that private home prices will add 10 per cent by the end of 2018, and double by 2030.
Similarly, UOB Kay Hian envisage that Singapore property prices will rise by 5 to 10 per cent next year after bottoming out this year.
"Historically, spikes in en bloc sales have preceded property sector price recovery in the past cycles in 2007 and 2011," UOB said.
It added that the levelling of taxation costs and cooling measures are building up the relative appeal of Singapore real estate. As such, they expect this nascent recovery to spread to the mid-range and high-end segments, driven by an en bloc fever and strong buyer sentiment from foreigners.