Prices of residential properties here are expected to increase by three percent to seven percent next year, reported the Singapore Business Review.
According to Analyst Vijay Natarajan from RHB Research, the anticipated price growth is driven by the city-state’s stable job market and robust buying optimism of locals. Another key factor is the en bloc fever that has resulted in sellers, who have received ample cash, needing to buy houses to replaces the ones they sold.
The research house pointed out that the forecasted price hike comes after prices in the city-state hit rock-bottom. The 0.7 percent quarterly rise in the Urban Redevelopment Authority’s (URA) Residential Property Price Index in Q3 2017 is a good indicator that residential values have bottomed out, it said.
Natarajan also noted that recent land bids by developers have factored in a price hike of 10 percent to 40 percent, assuming home builders are targeting typical profit margins of between 10 percent and 15 percent.
But the high bids could limit their profit margins. The recovery of the local housing sector could also be impacted by stiff competition for land, the sluggish rental market with a vacancy rate of 8.4 percent, and potential supply-side curbs by the government.
Looking ahead, RHB Research expects home sales to rise to 7,893 units and 8,696 units by 2018 and 2019 respectively. However, both figures are lower than Singapore’s 10-year average demand of 9,978 units per annum and 10-year average annual supply of 11,472 units.
This article was edited by Keshia Faculin.