Bullish expectations on Singapore property market for 2018

After years of declining home prices in Singapore, many are expecting a reversal of overall property prices in Singapore in 2018. This is even as most of the property cooling measures remain in place.

For 15 quarters, Singapore property prices have declined as the government introduce the curbs on property purchases. With an overall decline of 12 percent from its peak in 2013, analysts at UOB Kay Hian and Morgan Stanley are expecting an increase of 2-10 percent going into 2018.

The underlying reasons for this expectation stem from the fact that foreign buyers, especially from China have a long-standing interest in Singapore properties and are likely to increase their investments. This is despite the recent China’s government stemming capital outflows. Also, the popular property investments such as Hong Kong have imposed strict financial restrictions to cool international demand. This has levelled the taxes payable among these countries as compared to Singapore’s 15 percent additional buyer stamp duty on foreign purchasers.

In addition, the price-to-income ratio has decreased from 12 times to 10 times in the last 10 years and other countries such as Hong Kong has experienced to rise to 15 times from about 11 times. Also, the income growth will drive the first leg of a recovery in home prices in Singapore, where property ownership as a proportion of household assets is near a record low.

There has been an increase in en bloc sales by developers which involve existing homeowners selling apartments in older buildings to developers. The total figure has crossed S$3 billion in 2017, exceeding the combined transaction value in the previous four years. Armed with cash from these redevelopment sales, these buyers will add demand for homes in Singapore.

With the favourable domestic conditions and the external push factors in financial liquidity, Singapore property prices are set for the revival and upswing for the year of 2018.

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