Housing frenzy to moderate in 2018 amidst growing supply

Sales will remain muted whilst secondary home prices is poised to slow this year.

Even as the housing market registered frenzied levels of activity last year with secondary home prices rising for the fourteenth consecutive month last December, the panic buying spree may soon come to a pass this year amidst growing supply and favourable conditions, according to OCBC Bank’s weekly macro views.

The wealth effect from the stock market which fuelled high sales activity last year is likely to be slashed amidst global monetary tightening that is prompting capital rotation for emerging markets to developed ones. 

Moreover, an expected prime rate hike cycle this year may make mortgage loans more undesirable amidst higher costs.

“Against this backdrop, increase in new home supply may be able to weigh down the overheated housing market. Therefore, we hold onto our view that housing transactions will remain tepid while secondary housing price growth will moderate this year,” the report noted.