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Property's 'up cycle' unlikely to last

An "up cycle" for Singapore property may last into 2020, Morgan Stanley is reported to have said (Home prices could rise by 8% next year; Dec 11).

The report also states that home prices will climb by as much as 8 per cent next year.

Based on fundamentals, home prices are unlikely to increase next year, and it is doubtful that an up cycle will last into 2020.

The housing supply figures and foreign employment growth do not seem to support Morgan Stanley's forecast.

There are 30,000 vacant completed private housing units while foreign employment growth has been steadily declining, from 77,000 in the 2011-2012 period, to 27,000 in 2015-2016.

The vacancy rate has risen further to 8.4 per cent.

A vacancy rate at 7 per cent and higher will depress rental yield.

Record prices paid for land deals may not necessarily translate to higher home prices, given the demand and supply imbalance and weak rental market.

It is unlikely that the foreign employment growth trend will reverse, given fewer job opportunities.

Record prices paid for land deals may not necessarily translate to higher home prices, given the demand and supply imbalance and weak rental market.

The buoyant sentiment may fuel rising home prices.

However, uptrend prices are unsustainable because the laws of supply and demand will eventually prevail.

Wang Toon Tuan

A version of this article appeared in the print edition of The Sunday Times on December 17, 2017, with the headline 'Property's 'up cycle' unlikely to last '. Print Edition | Subscribe