Morgan Stanley expects S’pore property prices to double by 2030

With an “up-cycle” for Singapore property expected to last until 2020, Morgan Stanley sees home prices rising by as much as eight percent next year...

View of luxury condominium units in Singapore.

With the property market closer to a bottom, Morgan Stanley expects property prices in Singapore to double by 2030, which works out to a five to six percent increase per annum, reported CNBC.

This comes as the expected increase in transaction volume this year will spur property prices higher in 2018, the bank said in a note last week.

Singapore saw private home prices drop 0.5 percent quarter-on-quarter in Q1 2017, or its 14th consecutive quarterly decline.

Despite this, Morgan Stanley believes there are already signs of improved buyer sentiment. Park Place Residences, for instance, sold its entire phase one comprising 50 percent of the total 429 units within a day.

Supply is also poised to decline 40 percent each year from 2017 to 2018. Notably, private residential supply added about 20,000 units per year from 2014 to 2016, or double the historical average since 1990.

And unlike property market bears who expect an aging population, the bank expects a growing household formation driven by singles as well as a shift to higher-skilled foreign workers.

With this, Morgan Stanley predicts one in five households in Singapore to be occupied by just one person by 2030, an increase from one in eight in 2010.

The bank also expects the city-state’s economy to grow by about three percent over 2016 to 2030, outperforming other developed economies and supporting income growth.

“The Singapore economy is likely to see a cyclical recovery from better-than-expected external demand,” it said.

“Given that changes in economic conditions have a direct bearing on the property market, the improving macroeconomic outlook would be supportive of a property market recovery.”

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg