Singapore residential market will see volume and price weaknesses in 2019, DBS Research

Singapore residential market is projected to exhibit both volumes and price weakness in 2019, said a recent research paper by DBS Research Group.

The report in saying that the Singapore residential market is waiting for its turn to shine said that while there is good value in developers’ share prices, judging by historical trends in past property down-cycles, developers are likely to trade in a lower range until macro conditions turn up.

In noting that the Singapore residential market have peaked, while prices and volumes are on a downtrend in 2019., the research report said that given the surprise introduction of property cooling measures and uncertainty arising from new “minimum size” rules in 2018, the bank projects buyers to hold off purchases.

It further expects primary sales transaction volumes to fall 20 per cent year-on-year to 7,500-8,500 units while. It also predicted the the property price index (PPI) to fall even further if the macro conditions worsen.

With close to 40,000 units in the Singapore residential market ready for launch in a slowing market, the odds of achieving strong sales during launches are against developers, it noted.

The report said that displaced en-bloc buyers are unlikely to be the “boost” that developers are hoping for in 2019; and that Singapore residential market expectations of a boost in sales volumes from displaced en-bloc households up to middle of 2018 might not materialise.

The report said that assuming that these home owners are paid nine months after the close of the en-bloc tenders, it estimates that only 11 per cent of the total 8,500 en-bloc households will receive their monies in the 1st Half of 2019.

The report noted that Singaporean households remain the key buyer of new homes, and that based on data compiled by Realis as at 27 November 2018, out of the 22,000 units transacted in the first 11 months of 2018, a majority of the buyers in 2018 were Singaporean households, accounting for close to 79% of total sales with Singapore permanent residents (PRs) accounting for another 15% and the remaining 6% from foreigners.

Foreigners and PRs who are active in the property market come mainly from China (6.1% of total PR and foreigner transactions), followed by Malaysia (3.8%), India (1.8%) and Indonesia (1.8%). The report said that close to 34 per cent of sales are made to upgraders looking to purchase a private home.

The research report said that while the Singapore residential market is expected to remain weak, the commercial real estate prospects remain bright given positive demand-supply dynamics.

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