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Thread: Singapore property prices to double by 2030: Morgan Stanley

  1. #1

    Default Singapore property prices to double by 2030: Morgan Stanley

    Singapore property prices to double by 2030: Morgan Stanley

    Morgan Stanley expects property prices to increase by 5 to 6 per cent per annum.


    The protracted downtrend in Singapore's property market is poised to end next year, with home prices set to double by 2030, Morgan Stanley said in a Wednesday note.

    "Property market bears expect slower population growth, an ageing population, and a structural growth slowdown to weigh on the long-term property market outlook," the note said. "We disagree and believe home prices will double by 2030."

    That implies a 5 to 6 per cent increase per annum and would mark a reversal from a long downtrend in home prices.

    In the first quarter, overall private home prices fell 0.5 per cent on-quarter, the 14th straight quarter of declines. This time around, however, the bulk of the decline was in relatively small landed property segment, while non-landed prices were steady.

    The city-state's housing prices surged more than 60 per cent from 2009 through 2013, propelled by rock-bottom global interest rates and quantitative easing in developed economies, even as the government enacted a series of cooling measures from 2011 to prevent a bubble from forming.

    But in early March, the government scaled back some of the curbs, including lowering the seller's stamp duty and shortening the minimum holding period to avoid it.

    Morgan Stanley said that was a signal the property market was closer to the bottom, which should improve buyer sentiment.

    There were signs buyer sentiment has already picked up: One recent launch, Park Place Residences, sold its entire phase one, initially set at 40 per cent of the 429-unit total before being raised to 50 per cent, within a day.

    The bank expected sales volume would surge this year, with the increases in transaction volumes to spur prices higher next year.

    Supply was also set to decline, the bank noted. From 2014-16, private residential supply added around 20,000 units a year, twice the historical average since 1990, it noted. But in 2017-18, supply levels were set to fall 40 per cent each year, it said.

    The property market in Singapore can be closely watched for economic and investment implications.

    Morgan Stanley noted that around 91 per cent of Singapore's resident households own their homes, with residential property around 45 per cent of total household gross assets last year.

    Additionally, Asian investors tend to have large allocations to property in their portfolios.

    While property bears were pointing to an aging population, Morgan Stanley noted a rising household formation rate driven by singles, and a shift toward higher-skilled foreign workers.

    It estimated that by 2030, one in five Singapore households would be occupied by just one person, up from one in eight in 2010.

    Additionally, it expected "a combination of bequest motives, lease buyback schemes, and shifting manpower trends assuage property market selling pressures that come as the population ages."

    It also expected that Singapore's medium-term economic growth potential of around 3 per cent over 2016-2030 meant it would outperform other developed economies and support income growth.

    On Thursday, Singapore reported first-quarter gross domestic product (GDP) grew 2.5 per cent on-year, down from 2.9 per cent in the fourth quarter of 2016.

    "The Singapore economy is likely to see a cyclical recovery from better-than-expected external demand," the note 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."

    link



  2. #2
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    Quote Originally Posted by reporter2 View Post
    Singapore property prices to double by 2030: Morgan Stanley

    Morgan Stanley expects property prices to increase by 5 to 6 per cent per annum.


    The protracted downtrend in Singapore's property market is poised to end next year, with home prices set to double by 2030, Morgan Stanley said in a Wednesday note.

    "Property market bears expect slower population growth, an ageing population, and a structural growth slowdown to weigh on the long-term property market outlook," the note said. "We disagree and believe home prices will double by 2030."

    That implies a 5 to 6 per cent increase per annum and would mark a reversal from a long downtrend in home prices.

    In the first quarter, overall private home prices fell 0.5 per cent on-quarter, the 14th straight quarter of declines. This time around, however, the bulk of the decline was in relatively small landed property segment, while non-landed prices were steady.

    The city-state's housing prices surged more than 60 per cent from 2009 through 2013, propelled by rock-bottom global interest rates and quantitative easing in developed economies, even as the government enacted a series of cooling measures from 2011 to prevent a bubble from forming.

    But in early March, the government scaled back some of the curbs, including lowering the seller's stamp duty and shortening the minimum holding period to avoid it.

    Morgan Stanley said that was a signal the property market was closer to the bottom, which should improve buyer sentiment.

    There were signs buyer sentiment has already picked up: One recent launch, Park Place Residences, sold its entire phase one, initially set at 40 per cent of the 429-unit total before being raised to 50 per cent, within a day.

    The bank expected sales volume would surge this year, with the increases in transaction volumes to spur prices higher next year.

    Supply was also set to decline, the bank noted. From 2014-16, private residential supply added around 20,000 units a year, twice the historical average since 1990, it noted. But in 2017-18, supply levels were set to fall 40 per cent each year, it said.

    The property market in Singapore can be closely watched for economic and investment implications.

    Morgan Stanley noted that around 91 per cent of Singapore's resident households own their homes, with residential property around 45 per cent of total household gross assets last year.

    Additionally, Asian investors tend to have large allocations to property in their portfolios.

    While property bears were pointing to an aging population, Morgan Stanley noted a rising household formation rate driven by singles, and a shift toward higher-skilled foreign workers.

    It estimated that by 2030, one in five Singapore households would be occupied by just one person, up from one in eight in 2010.

    Additionally, it expected "a combination of bequest motives, lease buyback schemes, and shifting manpower trends assuage property market selling pressures that come as the population ages."

    It also expected that Singapore's medium-term economic growth potential of around 3 per cent over 2016-2030 meant it would outperform other developed economies and support income growth.

    On Thursday, Singapore reported first-quarter gross domestic product (GDP) grew 2.5 per cent on-year, down from 2.9 per cent in the fourth quarter of 2016.

    "The Singapore economy is likely to see a cyclical recovery from better-than-expected external demand," the note 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."

    link
    This article is fairly speculative. It addresses the oversupply equation partially by stating singles would drive some demand but this is not enough to double prices by 2030. 1 in 4 will be over 65 is amounting to 900k.

    https://www.nptd.gov.sg/PORTALS/0/HO...-scenarios.pdf

    The only way we can have such inflated prices by 2030 is simply adding migrants to Singapore which is not mentioned by MS. The oversupply we are facing will take years to absorb. Another point which singles alone cannot address. Moreover, these singles will likely shuttle between their aged parents and their own homes which they might lease out a room or 2 for their own income. This, minimizing the impact of demand from foreigners or migrants.

    I also see home ownership to decline slightly over time as not all Millenials who are experiential driven wanting to be saddled with huge SG housing debts in about 10 years.

    As much as I want my properties to enjoy such 'gains', the scenario of price doubling is very unlikely. What a potshot from a well known financial brand to spur growth in such downtrend.

    2 cents,
    PropVestor



  3. #3

    Default

    Would "Morgan Stanley expects property prices to increase by 5 to 6 percent per annum" be more accurate or PropVestor "As much as I want my properties to enjoy such 'gains', the scenario of price doubling is very unlikely. What a potshot from a well known financial brand to spur growth in such downtrend. " more accurate.

    Your guess is as good as mine.

    I will place my bet on MS given MS have access to lot more data than PropVestor.



  4. #4

    Default

    Let get the Data to speak.

    Another former HUDC estate Eunosville put up for en bloc sale

    Owners of 330-unit Eunosville have put their former HUDC estate up for collective sale - the second such sale this week.

    http://www.straitstimes.com/business...or-enbloc-sale

    Former HUDC estate Rio Casa up for en bloc sale

    As there are 286 apartment and maisonette units, each owner would receive about S$1.6 million per unit through the sale.

    http://www.straitstimes.com/business...r-en-bloc-sale

    Singapore, 20 MAY 2016 – Shunfu Ville, a 358-unit residential development in the popular Bishan/ Thomson area, has been successfully sold to a unit of Qingjian Realty (South Pacific) Group Pte Ltd, a conglomerate with a wide range of business operations such as contracting, investments, real estate development, capital management and logistics.

    http://www.jll.com.sg/singapore/en-g...s#.WO-chfmGN0w

    Sources say owners of the 175-unit Raintree Gardens in Potong Pasir Avenue 1 have got the minimum consent level required for the site to be launched for sale.

    http://www.homeanddecor.com.sg/artic...e-potong-pasir

    List of HUDCs
    HUDC Location Status New Condo
    Amberville Marine Parade enblocked Silversea
    Braddell View Toa Payoh privatised 2017
    Chancery Court Novena privatized 2004
    Eunosville Geylang privatised 2011
    Farrer Court Bukit Timah enblocked D”Leedon
    Gillman Heights Bukit Merah enblocked Interlace
    Rio Casa Hougang privatised
    Florence Regency Hougang privatised
    Ivory Heights Jurong East privatised 1998
    Laguna Park Marine Parade privatised 2007
    Lakeview Bishan privatised 2003
    Minton Rise Hougang enblocked The Minton
    Pine Grove Bukit Timah privatised 1996
    Raintree Gardens Toa Payoh enblocked 2016
    Serangoon North Serangoon privatised
    Shunfu Ville Bishan enblocked 2016
    Tampines Court Tampines privatised 2002
    Waterfront View Bedok enblocked 2007 Waterfront Collection

    http://www.tampinescourt.net/p/hudc-...ive-sales.html



  5. #5

    Default Reduce HDB resale supply, Increase demand from HUDC.

    Annual take-up of HDB’s Lease Buyback Scheme more than doubles

    SINGAPORE: Five hundred and forty-one households have taken up Housing and Development Board’s Lease Buyback Scheme within a year of enhancements, with 233 households owners of four-room flats.

    HDB noted that this annual take-up had more than doubled compared to previous years. Since the launch of the scheme in 2009, 471 households signed up in the first four years - averaging at about 117 annually. A further 494 took up the scheme following modifications in February 2013 over a period of about two years, an average of slightly less than 250 a year.

    The Lease Buyback Scheme is catered to elderly home owners living in four-room flats or smaller. They can sell the tail end of their flat’s 99-year lease back to HDB, in exchange for a cash bonus.

    On top of that, the proceeds from selling their flat’s lease will be used to top up their CPF Retirement Account. This provides them with monthly payouts, while they continue living in their flats.

    Among the 541 households who took up the scheme is Mr Abdul Rahman Kemat. He and his wife have been living in their four-room flat in Jurong West for since 1985.

    In January, the 68-year-old decided to sell about 34 years of the remaining lease of his flat to the Government under the Lease Buyback Scheme, giving him a payout of about S$1,000 each month. HDB then sold a new 35-year lease of Mr Abdul Rahman's flat to him at S$228,900 under the Lease Buyback Scheme.

    Because the security officer expects to retire soon, he said the extra income is useful. And that the Lease Buyback Scheme was the best option for him, as he did not want to downgrade to a smaller flat or rent out his apartment.

    "Because I love this place so much," he said. "The people here, I know well. My children are all grown up, they've got grown-up children. So I think it is not suitable for me to stay with my children. So I prefer to stay independently here with my wife."

    The latest round of enhancements, which kicked in in April last year, saw four changes to the scheme to benefit more elderly citizens and make it more flexible:

    The scheme was extended to 4-room flats, covering 75 per cent of elderly households, up from 35 per cent previously

    The income ceiling was raised from S$3,000 to S$12,000

    Households with two or more owners will only need to each top up their CPF Retirement Account to the basic age-adjusted retirement sum, instead of the full age-adjusted retirement sum. This gives them more cash in hand

    Elderly households can choose how long they want their lease to be retained, from 15, 20, 25, 30 or a maximum of 35 years. But it must cover the youngest owner until he or she is 95 years old. Previously, flat-owners only had the option of keeping a 30-year lease
    'STILL A SMALL PORTION OF ELIGIBLE HOUSEHOLDS': ANALYST

    Since then, around 5 per cent of the 541 households who signed up had income exceeding S$3,000. Nearly half, 261 households, chose to retain a lease length other than 30 years.

    "Perhaps one of the reasons is that retirees in four-room flats may feel that the value of their flats is a bit larger," said Mr Nicholas Mak, executive director of SLP International Property Consultants. "So if they were to join this scheme, they would be able to unlock a larger part of cash that can help them in their retirement planning."

    Mr Mak said while there was a significant increase in the take-up of the Lease Buyback Scheme, it is still a small proportion of the eligible households.

    "When we look at over 500 households that have taken up this scheme, and we compare this islandwide, with all the HDB flats that's available out there, the number seems to be very small. I estimate less than 1 per cent of the eligible households have actually taken up this scheme," he said.

    Mr Mak said that perhaps more awareness of the scheme was needed to encourage more households to take part. HDB added that it will continue outreach efforts to help elderly households better understand the monetisation options available to them.

    HDB is providing financial counselling for applicants of the Lease Buyback Scheme. During these counselling sessions, the various monetisation options available are explained to those interested. They are also given an estimation of how much total payout and monthly income they can expect to receive.

    - CNA/rw



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