RHB Expects Steady Job Market, Improved Optimism to Boost Singapore Home Prices in 2018

RHB Research released a report saying that Singapore property prices are bottoming out as job market remains stable and as optimism improves

Bankbazaar Singapore – 21, December 2017

Home prices in Singapore could increase by as much as 7% in 2018, said a latest RHB Research report. The report added that the growth will be driven by stable job market and improved optimism among buyers.

In a year-end report, RHB Research analyst Vijay Natarajan said that the recent data from Urban Redevelopment Authority (URA) also signalled rebound in Singapore’s property prices. A recent preliminary data from URA showed that Singapore’s Residential Price Index grew 0.7% quarter-on-quarter in the three months ended September 2017. Singapore’s Residential Price Index, which tracks the prices of private residential properties, declined for 15 consecutive quarters before finally showing a rebound in 3Q17.

RHB Research’s report said that growth in property prices will be mainly driven by better job market conditions, increased optimism among buyers, and improved liquidity in the system.This is good news for banks and financial companies offering home loans in Singapore.

Natarajan added that the growth in en bloc deals has helped improve liquidity in the system and overall optimism in the market. According to a media report, the en bloc deals so far this year are valued at about S$7.8 billion, compared to just S$3.3 billion recorded over the last five years.

However, RHB Research analyst added that the competition witnessed in en bloc deals, which has driven land prices higher, may also result in squeezed profit margins for developers.

In March this year, the Singaporean government eased some restrictions on the property market, in its efforts to revive the property market conditions. The government reduced the seller’s stamp duty for each tier and also shortened the holding period from four years to three years.

According to a Morgan Stanley report, Singapore’s property prices are set to double by 2030, indicating a growth of 5-6% p.a.