Overall vacancy in private housing is to peak at 12.6% in 2017.
There could be a budding supply-led recovery in selective property sectors which include residential spaces, UOB Kay Hian foresees.
Their analysis of unsold private residential inventory indicates that 2018 is likely the year where vacancy could reverse its upward trend after peaking this year, as supply tapers.
"We expect overall private housing vacancy to peak at 12.6% in 2017 before fundamentals begin improving in 2018 (12.5% vacancy) to 2020 (11.1% vacancy)," the research house noted.
It furthered, "This will be propelled by tapering private residential supply, as even we forecast muted residential demand of about 8,200 units p.a. from 2015 to 2020, by incorporating conservative population growth estimates at a CAGR of 1.2%."
As of 3Q16, unsold inventory, including completed units, of 27,894 units was near trough levels, based on URA data stretching back to 1999. 4Q16 URA flash estimates indicate slower qoq decline, with the private residential price index down 0.4% qoq compared with 3Q16’s 1.5% qoq contraction. The flash estimates also indicate a slower decline in private home prices for 2016 (-3.0%) compared with 2015 (-3.7%).
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