The View | 4 reasons Singapore’s housing market is not about to collapse
- Singapore’s housing market was bound to slow significantly after undergoing a boom in recent years, but there is no indication a steep decline is on the way
- Moreover, the government has the policy tools needed to avert a sustained drop in prices
In a report published earlier this month, Morgan Stanley said “the end is near for what has been an historic rally in [Singapore] private home prices”. The bank predicts a 3 per cent decline in home values next year following a seven-year-long rally, “marking the start of [a] downcycle”.
If its forecast proves accurate, this would be a dramatic reversal of fortune for a market that experienced a nearly 20 per cent rise in prices in 2021-22 and is expected to witness a further 4-5 per cent increase this year.
Morgan Stanley said the drop in prices would be caused by a combination of much weaker demand and a sharp increase in supply. It pointed to “regulatory deterrence for foreign buyers” and “a narrowing pool of public housing upgraders” as key factors that, together with a reversal in the demand-supply imbalance, would cause home values to fall.