Three signs that the property market is recovering

For one, unsold inventories have been declining for two years already.

The stars have begun to align for Singapore's property market after the private residential price index showed growth after 15 quarters of decline.

DBS Equity Research said the property market recovery is expected to be gradual in the next 12 months with more real estate transactions.

The firm is expecting transaction value to hit $40b in 2017, $42.2b in 2018, and $44.3b for 2019 for the total private residential market, which includes both primary and secondary markets.

DBS Equity Research is also expecting price recovery of 3-5% per annum over the next two years.

They also said three factors driving the recovery include low unsold inventories.

The total number of unsold private residential units, including executive condominiums (EC), has been declining for the past two years and reached 17,178 as at 30 September 2017.

Another factor driving recovery is affordability. DBS cited Cushman & Wakefield data which showed Singapore’s housing to income ratio of 4.8 in 2016 is lowest compared to other global cities like Hong Kong with 18.1, New York with 5.7, and London with 8.5.

"This could mean that transactions in Singapore will likely remain robust and international investors could look to invest in Singapore given the relative affordability of its houses," said DBS analyst Lee Keng Ling.

The last factor that DBS cited is the increasing demand from foreigners.

The growth in the number of high net worth individuals and wealth per capita, coupled with the still low-interest rate environment, has led to many capital inflows into the property market, Ling said.

However, the proportion of foreign buying is still low at 6%, below the historical average of 9%.