Broker's take: Singapore home prices to rebound for first time in 4 years

OCBC Investment Research expects the Urban Redevelopment Authority's (URA) third-quarter price index to rebound for the first time in four years - a key inflection point marking the end of the Singapore housing bear.

The URA's flash estimate will be announced next Monday, with official statistics to be released on Oct 27.

In their report on Thursday, OCBC analysts said: "We believe that the trough is in fact behind us and Singapore home prices likely hit their cyclical lows in mid-June 2017."

They cited three reasons for their view. Firstly, the URA had previously adjusted its figures for the second quarter upwards from the flash estimate of -0.3 per cent to the official statistic of -0.1 per cent, indicating that home prices improved in the last few weeks of June. Given firm market conditions, OCBC expects this upward trend to have continued into Q3 2017.

Additionally, sales volumes and take-up rates in the primary housing market strengthened in July and August this year. Total new home sales rose 35 per cent year on year to 3,672 units in these two months, while the take-up rate (total sales over total launches) surged to 193 per cent from 131 per cent over the same period from a year ago.

Thirdly, OCBC's research suggests that price expectations of developers and home sellers in the secondary market increased over the past few months, with the prices of new launches inching up as well.

Taken together, OCBC's analysts are forecasting for Singapore home prices to be overall flat in 2017 and appreciate by 3 to 8 per cent in 2018, as the rental market picks up and macroeconomic conditions remain robust.

The report maintained the analysts' "overweight" rating for the property sector, with their top picks being City Developments, UOL Group and Wheelock Properties.