SINGAPORE (BLOOMBERG, REUTERS) - Credit Suisse Group and Morgan Stanley are calling the end of Singapore's property downturn, after a second consecutive quarterly increase in private residential prices.
Home prices may rise as much as 10 per cent this year, according to analysts at Credit Suisse, while Morgan Stanley and OCBC Investment Research expect as much as an 8 per cent increase, according to reports from the brokerage firms.
Private residential prices rose for a second straight quarter in the final three months of 2017, reinforcing signs that Singapore's property market is emerging from a four-year slump. For 2017, prices rose 1 per cent compared with a 3.1 per cent decline in 2016, flash data from the Urban Redevelopment Authority showed last week.
Developer valuations remain attractive, according to Credit Suisse, whose top stock pick is UOL Group due to its high exposure to Singapore and its residential market. UOL is also one of two developers cited by OCBC as having the best prospects. City Developments is Morgan Stanley's favorite, and also one of OCBC's best picks.
Collective sales, or "en-bloc" deals, valued at S$8.3 billion last year should continue to enhance the property market in 2018, said Credit Suisse.
Home sales may increase 40 per cent in 2018, said Morgan Stanley, adding that the housing recovery will extend through 2019.
Potential government cooling measures pose risk but such moves may be premature as the market is just two quarters into a recovery, the firm said.
The surge in home completions from 2021 could begin to dampen sentiment but prices could double by 2030, Morgan Stanley added.
OCBC said new home sales could hit an estimated 12,000 to 15,000 units in 2018 while rental prices could climb between 5 per cent and 10 per cent this year.
Developers sold 10,247 new private homes, excluding executive condominiums, in the first 11 months of last year, according to official figures, while rents of condominiums and private apartments dipped 0.5 per cent in 2017, according to estimates from SRX Property.
Real estate services firm Colliers on Wednesday said average home prices may rise by 17 per cent over the period 2018 to 2021, supported by higher economic growth, falling physical completions and ongoing collective sale deals.