Weak property market to fuel Singapore deflationary streak in 2016: report

And transport-related prices probably won’t spike either.

According to a report by BMI, Singapore headline inflation is expected to remain subdued in 2016, amid mild commodity price, monetary aggregate, transport, and housing fundamentals. This will extend Singapore’s deflationary trend that’s lasted over the last 12 months.

BMI forecasts that the deflationary impulse from housing will persist as the gradual rollback of decline in the inflow of skilled foreign labour has impacted demand right when an influx of new units poured into the market. Meanwhile, regulators are adamant on property market cooling measures such as loan-to-valuation ratios and additional buyer’s stamp duties.

With such a stage, the housing price category of CPI performed weakly—it fell by 4.3% YoY in October, significantly weighing down the overall index. BMI noted that this may continue as expectations are for government to remain firm on its cooling measures and immigration policies.

At the same time, COE prices should remain relatively stable in the next few months as downwards pressure is kept in place by ample supply and moderate demand conditions. Coupled with restrained commodity prices, there’s little to suggest that transport-related price growth should see a significant spike over the coming year.

However, transport prices are also unlikely to see any sizeable drops during 2016 as the deflationary impact of the commodity price-rout from late-2014 is geared to peak in the next three months.