SG housing market expected to slow down, finally!

SINGAPORE: Is the end in sight for the red-hot property market in Singapore? Morgan Stanley analysts seem to think so due to a current supply and demand imbalance, as well as higher stamp duties imposed earlier this year that may well discourage non-Singaporean home buyers, reported Bloomberg on Thursday (Nov 9).

The country has just seen a seven-year-long rally in private home prices, the longest stretch in the past four decades. And now, analysts from US-based financial services company Morgan Stanley are saying it’s about to finally slow down, even as housing prices went up in the third quarter of the year. But while more land than in the past ten years in Singapore is being put up for sale, the number of investors is not expected to increase but to decrease.

Morgan Stanley analysts expect a 3 per cent decrease in home prices next year, adding that they foresee this to last for the next two years.

On a related note, residential rental prices, which went up by 15 per cent this year, are also expected to decrease by as much as 10 per cent next year.  And in the event of a crisis, or should the macro-economy worsen, rental prices may go down even more, said Bloomberg Intelligence analyst Ken Foong earlier this week.

Read also: PropertyGuru: 2023 likely to be record-breaking year for million-dollar flat transactions

With the end of the Covid-19 pandemic sounding a “back to business” note for the construction sector, more homes have been built this year, which is likely to cause lower rental rates.“Tenants are likely to push back on sky-high rents due to higher vacancy, with more units to choose from, macro uncertainties and the rising cost of living,” said Mr Foong. There are 34,341 vacant housing units for the third quarter of the year.

Data released by the Urban Redevelopment Authority (URA) on October 27 showed that the 0.8 per cent in private residential property rentals came at a slower pace than the 2.8 per cent increase in the second quarter. It also noted a moderation in rental increases for the fourth consecutive quarter. It added that the third quarter increase is the smallest quarter-on-quarter gain since the fourth quarter of 2020.

Notably, around 9,000 private residential units, including executive condominiums, were finished last quarter, the most since the second quarter of 2016. The URA added that for this year, it expects that a total of 20,400 private residential units will be completed, the most since 2017.

Read also: HDB: Q3 resale prices up 1.2%, private property up 0.5%  /TISG