Analysts expect some announcement with regards to the property cooling measures at the upcoming budget speech.
With home prices set to make a comeback, analysts expect the government to signal its intention to review the property cooling measures during the budget speech in February, which could, in turn, boost the city-state’s biggest developer stocks, reported Bloomberg.
Home prices have dropped by 11 percent since 2013, with sales falling to around half of that year’s level, after the government rolled out a slew of cooling measures to curb soaring values. In 2016, however, the city-state witnessed a surge in home sales as developers moved more than 8,000 units, up nine percent from the previous year.
Meanwhile, an equal-weighted index of CapitaLand, CDL and UOL Group – Singapore’s three largest developers by market value – has outperformed the Straits Times Index year-to-date after dropping by 3.6 percent last year.
Credit Suisse analysts revealed that Singapore developers are now trading at a one-year forward price-to-book of 0.7 times, which is an “undemanding” valuation close to its 2008 to 2009 lows.
“We believe the risk-reward to be attractive today, with a potential easing of measures a key upside optionality,” wrote Oversea-Chinese Banking Corp Research Head Carmen Lee, a view also shared by analysts at CIMB Research and Credit Suisse AG.
And between buying stocks and physical property, Lee believes stocks “offer you the liquidity and they are pricing in all the negatives”.
“They may not outperform in the next one to two quarters, but if you ride this out for 18 months or so, you will see better upside,” she noted.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
