Property prices inflecting, on track to double by 2030

PROPERTY market trends matter for the economy and stock market in Singapore. Given the high home ownership rate in Singapore, housing is the most important asset class for most people, with residential property comprising 45 per cent of gross household assets in 2016. With the economy and property market inextricably linked, cyclical macro momentum will influence the trajectory of property prices, which in turn has knock-on implications for stock-market performance, household balance sheets and sentiment.

Singapore's private home prices have fallen for 14 consecutive quarters - by 12 per cent cumulatively - from its peak in Q2 2013. Public home prices have also declined by a cumulative 10 per cent since peaking in Q2 2013. The weakness in the residential property market is driven by a confluence of factors: a slowing global and domestic economy; a deliberate attempt by policymakers to bring down home prices through a series of property market cooling measures; and a slowdown in population growth.

Looking forward, however, we expect home prices to inflect in 2018 amid an improving macroeconomic outlook. Indeed, Singapore's exports have picked up materially in the past few months, and the economy has benefited from the first synchronous global recovery between developed and emerging markets since 2010. Morgan Stanley's global economics team expects global growth to accelerate in 2017 and 2018, with emerging markets excluding China driving the recovery.