Why It Matters

Too early to herald recovery

Data on the property market has been slightly more upbeat in recent months, after years of being weighed down by a combination of slow economic growth and market cooling measures. But it might be too early to herald a return to boom times.

The private residential market seems to have turned the corner in the third quarter, with prices rising after almost four years of decline.

Overall prices went up 0.7 per cent in the three months to Sept 30 compared with the previous quarter. This beat earlier estimates of a 0.5 per cent rise and ended 15 quarters of decline, according to Urban Redevelopment Authority (URA) data.

These latest numbers - combined with the rosier economic outlook and a recent flurry of activity in the collective-sale market - have been seen by some as a sign that the property market is finally emerging from the doldrums.

But analysts have noted that any pick-up in home prices is likely to be gradual, especially since cooling measures - such as the total debt servicing ratio and additional buyer's stamp duty - continue to keep speculative demand in check. In fact, inflated land prices - not stronger demand - are likely to have a bigger impact on home prices, noted Mr Desmond Sim, head of research for Singapore and South-east Asia at property consultancy CBRE.

The redevelopment of collective-sale sites could add a significant number of housing units to the existing supply pipeline - an additional 9,300 units, the URA said in its latest statistics release. Coupled with a further 7,400 units from government land sales in the coming years, the yield from collective sales could nearly double the number of unsold private homes in the pipeline, assuming planning approval is obtained. There are already 17,178 units that have received approval on the way.

Still, one factor that could provide a boost is the recovering job market. If sentiment continues to improve, there could be spillover effects in the property market.

But ultimately, it is too early to tell whether a decisive pick-up is under way.

A version of this article appeared in the print edition of The Straits Times on October 30, 2017, with the headline 'Too early to herald recovery'. Print Edition | Subscribe