Singapore’s private residential property market seems to be gearing towards an upswing. This is the sentiment echoed by many industry watchers including banks, developers and market researchers. In fact, Morgan Stanley has gone as far as to project that property prices in Singapore will double by 2030.
Prices will bottom out by next year
A representative from DBS is reported to have mentioned that property prices will at best be stable this year. This is as a result of unsold inventory that will still have an impact in the short term. But prices are set to increase thereafter.
According to a statement made by Morgan Stanley, Singapore’s property market downtrend will take a turn next year. And by 2030, property prices will double. This will imply a 5-6% increase in residential property prices each year.
Also buoyant about the property market is Cushman & Wakefield. In a news report, managing director for Asia Pacific research recently cite growing market activities to be a positive sign.
But this upturn might take place before next year. A spokesperson from Savills forecasts that residential prices are set to increase this year. According to him, the average length of a market downturn from 1975 to 2011 was 8.4 quarters. Given that the market has had a run of 14 consecutive quarters of price declines, the down cycle has been dragging for too long and should be reverse sooner rather than later.
Buyer sentiment is improving as the government eases curbs
In the same report, Cushman & Wakefield notes that the government’s move to lower seller’s stamp duty, decrease total debt servicing ratio and reduce the minimum holding period, among other changes, is incentivising a lot of buyers. And this will introduce vibrancy back to the market.
Already, new launch show suites are garnering much buyer interest. Launched it was first launched in February, the 505-unit The Clement Canopy sold 207 units at a median price of S$1,343 in the first month. In March, another 59 units were sold at S$1,366 psf. Sales in the two months accumulated to 55% of total number of units. Among the buyers, 90% are locals, and the remaining 10% comprise of foreigners mainly from China or Malaysia.
Another project that has roused strong buyer interest is 843-unit Seaside Residences located at Siglap Link. During the first weekend of its official launch on 22 and 23 April, 392 of 560 released units were sold. About 5,000 people showed up at the project’s show suite during its preview weekend.
Morgan Stanley also suggests that the government’s recent move to ease curbs is an indication that the property market is near its bottom.
Home supplies are declining and buyer profiles are shifting
Another contributing factor is declining home supplies. Even though more than 50,000 private residential properties were added into the property scene every year from 2014 to 2016, supply will fall 40% each year in 2017 and 2018. This is partly due to developers moderating planned supply.
Combined with the trend of increased singles and higher-skilled foreign workers, occupancy in one out of five household is projected to comprise of just one person in 2030, as compared to one in eight in 2010.
The recent recalibration of government measures could be a way to test how the market will respond to changes in policies. Similar to how tightening measures were rolled out in phases during the last property cycle upswing, measures to ease earlier revisions are likely to take place, but over a course of time. For sure, this has already piqued buyers’ interest in Singapore.