3 reasons why home prices may rise in 2018

It could start with a surge in sales volume this year.

The residential property market in 2018 is set to see an inflection amidst the improving macroeconomic outlook for Singapore.

According to a report from Morgan Stanley, the economy is seeing a cyclical recovery from better exports and manufacturing output.

"We see upside risks to our base case GDP growth forecasts. Our bull case GDP forecasts are 2.3%/2.8% for 2017/2018. This improving outlook would help drive an inflection in home prices in 2018," Morgan Stanley said.

Meanwhile, three factors could also affect home prices. For one, Morgan Stanley expects home sales volume to surge this year. This would lead to a positive signal for home prices in the coming year.

It added, "The easing of property curbs suggests that we are closer to the bottom, which will improve buyer sentiment."

Lastly, the supply-demand dynamics are improving significantly, with supply already peaking, demand surprising on the upside, and unsold inventory is at an all-time low.