Brace yourselves for a 10% property price hike

This would come as volumes approach five-year peaks.

Some analysts are believing that the time has come for the property market to undergo an inflection.

According to DBS Group Research analysts led by Derek Tan, recent market indicators point toward a property market inflection this year and a rise in property prices from 2018 onwards.

To recall, property sales in the first six months of the year have increased 46% YoY. The analysts believe that if the sales momentum continues, volume will reach a five-year peak.

"In our analysis, we found that 94% of home buyers in 1H17 are Singaporean households. A wildcard to a further acceleration in price is when the wave of buying from foreigners return, especially for homes in the Core Central region," they noted.

With this, they forecast property prices to rise by 6-10% in two years.

Meanwhile, the rise in property prices will be supported by the market absorption rate which is at multi -year lows. Unsold inventories are at 16-year lows at 29,000 units, they cited.

"When compared against current transaction levels, we found that market absorption rate (ratio of unsold units and new sales) stands at 2.1x and it is the tightest in the suburb (Outside Central region)," DBS Group Research analysts noted.

They added, "Even if we were to include the more than 3,000 unlaunched new units from the recent government land sales (GLS) and en blocs, we believe the market can absorb them easily."
 

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