Home prices in early stage of multi-year recovery

/ EdgeProp
January 10, 2018 10:21 PM SGT
Brighter prospects for the property market are expected this year, according to the 2018 Asia Pacific Property Outlook report by Colliers International, which was released on January 10. In Singapore, investment sales are likely to stay robust following bumper transactions of about $40.2 billion last year. The residential sector accounted for 54% of the deals due to strong demand for sites via public tender and the collective sale market. This is the highest annual investment sale value since the last property boom in 2007.
Investment sales in 2017 rose 54% y-o-y and positive momentum should carry into 2018, says Tricia Song, head of research for Singapore at Colliers. She adds that as at January 10 there are 11 residential collective sale tenders closing in the coming five weeks, including City Towers and four government land sales (GLS) tenders due on Jan 30, giving the residential sector a strong start to 2018.
In a separate report, Morgan Stanley (MS), says that home prices are still in the early stages of a multi-year recovery. MS expects an 8% increase in home prices in 2018 which can be sustained until 2019. Given the rise of en bloc activity last year, 2018 could also be a record year for launches, says MS, which expects sales volume to grow 40% this year.
The recovery in private residential prices is set to continue, says Song, and the current wave of collective sales could accelerate price recovery “in the near term” as beneficiaries provide “immediate incremental demand”. Average home prices may rise by 17% over 2018-2021, supported by higher GDP growth, falling completions, and ongoing collective sale deals.
The en bloc boom is likely to persist and displaced home owners could add to the pool of potential buyers, says Morgan Stanley. The recovery could sustain until 2019 as recent property cycles have lasted for four years the report stated. It also predicts that 17 projects with 15,000 units could be launched this year, which is triple the number of units at the eight projects launched last year.
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