Signs of residential market in Singapore improving

The residential real estate market in Singapore is improving with home prices rising and sales of new homes increasing, according to a new report.

Private home prices rose for the first time in four years with an increase of 0.7% in the third quarter of 2017 and new home sales rose 29.1%, data from the Urban Redevelopment Authority shows.

Looking ahead research from real estate firm JLL suggests that prime home prices in Singapore are set to rise 24% over the next four years but homes will still be affordable.

Regina Lim, head of capital markets research at JLL Singapore, believes that most developers will price in 10% to 20% rises in home prices over the next 24 to 36 months. ‘In our view this is not excessive. Even if prices rose 24% over the next four years amid 2% annual wage increases, the home price to income ratio of six years will still be moderate compared to many other global cities,’ she explained.

However, market watchers are wary of signs of the market overheating, prompting fears of another round of cooling measures. According to a recent survey by the Real Estate Developers’ Association of Singapore (Redas) and the National University of Singapore’s Department of Real Estate, developer optimism has reached a seven year high, bringing it to the same level seen just before the Government introduced policy measures to cool the market in 2010.

Tan Hong Boon, from JLL’s capital markets team in Asia Pacific, is not overly concerned. ‘There is little to suggest that the Government will make any changes to cooling measures at the moment,’ she said.

She pointed out that seller stamp duties and the total debt servicing ratio were tweaked earlier in March this year. ‘They will likely watch the market to ensure that home prices do not rise too fast,’ she added.

The JLL report also points out that land sales in 2017 have been ‘frenzied’ with 17 residential sales so far in 2017, including the record breaking $097 million Amber Park site, the largest freehold site by value.

It estimates that there has been $1.9 billion in sales, much higher than the $1 billion recorded in 2016 and primary market home sales have reached $16 billion this year.