With property sales surging 46 percent year-on-year in 1H 2017, analysts believe the property market is headed for an inflection this year, reported Singapore Business Review citing a DBS Group Research report.
In fact, the analysts expect to see a hike in prices this year, while sales volume could hit a five-year peak in the event the sales momentum continues.
“In our analysis, we found that 94 percent of home buyers in 1H 2017 are Singaporean households. A wildcard to a further acceleration in price is when the wave of buying from foreigners return, especially for homes in the Core Central region,” noted DBS Group Research analysts led by Derek Tan.
As such, property prices are expected to increase by six to 10 percent in two years.
The hike in prices will be buoyed by the market absorption rate, which is currently at multi-year lows. Notably, unsold inventories stand at 16-year lows at 29,000 units.
“When compared against current transaction levels, we found that market absorption rate (ratio of unsold units and new sales) stands at 2.1x and it is the tightest in the suburb (Outside Central region),” said the report.
The analysts believe the market can easily absorb them even if the unlaunched new units of over 3,000 from the en blocs and recent government land sales were to be included.
This article was edited by Denise Djong.