Chart of the Day: Don’t expect home prices to bounce back this year

Downward pressure is almost certain to remain in place.

Singapore’s residential property market may be even murkier this 2016, with very low rental yields floating between 3-4%, which remain under downwards pressure owing to the government’s continued tightening of skilled foreign worker inflows.

According to BMI Research, an influx of new supply is also expected to hit the market in 2016, aggravated by weary investors wary of the low yield environment.

“Finally, relatively strict macroprudential measures remain in place as regulators continue to pursue greater affordability of resale HDBs and private properties while also preventing the accumulation of high levels of household debt,” BMI Research said.

Meanwhile, while some adjustments are possible given that Singapore's difficult macroeconomic outlook would not provide a fertile ground for a transitory recovery in prices, BMI Research says the broader stamp duty and loan-to-valuation framework is almost certain to stay.

“We envisage a further decline in property prices in 2016,” BMI Research said.