As institutional and retail investors wait eagerly for the Urban Redevelopment Authority’s (URA) 3Q17 flash estimate next Monday on 2 October 2017, OCBC Research expects the first rebound in home prices after four long years.

We might actually be near the end of the Singapore housing bear market, or at the very least, see the end of it.

OCBC Research is not the only research house to think so, UOB Kay Hian Research and May Bank Kim Eng Research released reports one to two weeks earlier too.

3 signs of recovery in late June 2017

  1. The URA’s flash estimate for 2Q17 came in at -0.3%. Subsequently, after accounting for all the caveats lodged in the last few weeks of June, that percentage inched up to -0.1%, pointing towards improving sentiments.
  2. Home sales volume increased 35% year-on-year while the conversion rates of property launches shot up to 193% from 131% year-on-year in July and August 2017. In short, demand over supply is improving.
  3. The secondary market is also seeing better days as new launches and resale homes are selling at higher prices and accelerating.

Prices should pick up 3-8% in 2018

All that said, OCBC Research believes the bottom of the property sector is behind us. While prices start to recover, we should only experience another flat quarter before seeing prices shoot up in 2018.

According to OCBC Research’s analysis and forecasts, the property rental market will follow suit and macroeconomic conditions look decent.

OCBC Research’s top picks are:

City Developments Limited (SGX: C09) – BUY; Target price $12.39

UOL Group Limited (SGX: U14) – BUY; Target price $9.01

Wheelock Properties (Singapore) Limited (SGX: M35) – BUY; Target price $2.27