As the market moves closer to the peak of incoming supply, private home prices in Singapore could decline by up to five percent while demand remains robust at around 20,000 units, said DBS Group Research.
Moreover, the government is set “to release policy review papers on population, infrastructure and land use (Concept Plan and Master Plan) this year”.
DBS said that this may provide “some indicators to population targets for the medium to longer term. While we expect this to provide some catalyst for the sector, we see this as medium-term in nature, as we believe any acceleration in migration is likely to happen when the current infrastructure and housing bottlenecks are alleviated”.
But in the near term, the market is expected to focus on the prospect of rising inventory and the effect on occupancy and rental yield levels.
“That said, we think that RNAVs for property companies are likely to remain relatively flat, given the expected modest decline in home prices and stable office capital values. As such we expect investors to focus on other catalysts such as asset value unlocking as a driver for share prices,” DBS added.
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