http://www.todayonline.com/business/private-home-prices-drop-3-7-next-year-ocbc-analysts
SINGAPORE — Private home prices in Singapore are forecast to dip by 3 to 7 per cent next year, while rents are expected to fall by 5 to 10 per cent, burdened by persistent housing oversupply and the imminent rise in interest rates, said OCBC Investment Research analysts Eli Lee and Andy Wong Teck Ching in a report published on Friday (Dec 9).
Although housing prices are seen continuing the decline that began since the second half of 2013, a severe drop is unlikely, as significant buyer demand is expected to come into the market at lower price points, while the Government may ease cooling measures if the economic outlook deteriorates rapidly, they added.
“We believe that the current physical oversupply situation would persist over 2017, which will continue to drive falling prices ahead. We entered the current oversupply situation in late 2013, and the islandwide vacancy rate rose 3.3 percentage points from 5.4 per cent as at end-2012 to 8.7 per cent as at end of the third quarter in 2016. Similarly, the rental index of the private residential sector islandwide dipped 10.6 per cent as at end of the third quarter in 2016 from its peak in the third quarter of 2013,” said the analysts.
Meanwhile, rising interest rates will add pressure on mortgagors and curtail marginal demand, with the US Federal Reserve set to raise its benchmark rate target next week for the first time in a year. Investors see a 95 per cent probability of a 25-basis point rate rise to between 0.50 and 0.75 per cent at the Fed’s Dec 13-14 meeting, indicated federal funds futures pricing on Friday.
SINGAPORE — Private home prices in Singapore are forecast to dip by 3 to 7 per cent next year, while rents are expected to fall by 5 to 10 per cent, burdened by persistent housing oversupply and the imminent rise in interest rates, said OCBC Investment Research analysts Eli Lee and Andy Wong Teck Ching in a report published on Friday (Dec 9).
Although housing prices are seen continuing the decline that began since the second half of 2013, a severe drop is unlikely, as significant buyer demand is expected to come into the market at lower price points, while the Government may ease cooling measures if the economic outlook deteriorates rapidly, they added.
“We believe that the current physical oversupply situation would persist over 2017, which will continue to drive falling prices ahead. We entered the current oversupply situation in late 2013, and the islandwide vacancy rate rose 3.3 percentage points from 5.4 per cent as at end-2012 to 8.7 per cent as at end of the third quarter in 2016. Similarly, the rental index of the private residential sector islandwide dipped 10.6 per cent as at end of the third quarter in 2016 from its peak in the third quarter of 2013,” said the analysts.
Meanwhile, rising interest rates will add pressure on mortgagors and curtail marginal demand, with the US Federal Reserve set to raise its benchmark rate target next week for the first time in a year. Investors see a 95 per cent probability of a 25-basis point rate rise to between 0.50 and 0.75 per cent at the Fed’s Dec 13-14 meeting, indicated federal funds futures pricing on Friday.
