BankBazaar Singapore – January 11, 2018
Singapore: If you are planning to buy a home in the next coming years, expect to shell out more money than before. This will mean applying for higher home loan amounts.
Improved GDP rates, the current en bloc sale frenzy, and dropping physical completions could give a major boost to residential property prices in the country over the next three years, says a real-estate services provider.
According to a report from Colliers International, Singapore home prices may increase 17% from 2018 to 2021. The fresh forecast is in line with expectations from other analysts and recent trends that have indicated that the property market is recovering.
Analysts at Credit Suisse expect the prices to rise 10% in 2018 according to certain media reports. Others at OCBC Investment Research and Morgan Stanley project the increase to be at 8%. Data released last week by the Urban Redevelopment Authority (URA) showed that property prices had risen 1% last year after dipping 3.1% in 2016. Data from Colliers shows investment sales were up 54% in 2017 over the previous year.
The renewed optimism in the market is, to a large extent, due to the recovering macroeconomic conditions. The country’s GDP had risen 3.1% year-on-year in the fourth quarter of 2017. Market research firms expect growth to be somewhere between 2% and 4% in 2018.
Other contributing factors are persisting interest in collective sales and a fall in the number of projects that have been completed but are yet to generate revenue. 2017 had seen several residential developments being offered for collective sales and the trend is continuing this year too.
Tricia Song, Singapore research head at Colliers, said that 11 residential en bloc sales tenders are set to close over the coming five weeks. This includes four GLS tenders and City Towers in District 10.
But not everyone is certain about the impact of collective sales on the prices. In fact, some analysts are of the opinion that the en bloc sales fever has begun to cool down. The Straits Times had recently reported that of the six collective sale sites that had their tenders closed in December, only three ended up being sold.
Alan Cheong, Senior Director of Savills Singapore, told the daily that there are more than 120 potential sites for en bloc sales across the country. The smaller sites among these may be sold but after that, the collective-sales market may largely remain dull.
Private home prices had risen to record-high levels in the third quarter of 2013. This had prompted the government to intervene and take steps to control the market. The result was a prolonged period of weakening property prices that lasted till the second quarter of 2017.