SINGAPORE (Sept 28): OCBC is maintaining an “overweight” rating on Singapore’s property sector.

The Urban Redevelopment Authority (URA) will be reporting its 3Q17 update for its private residential property price index shortly.

OCBC predicts that the figures will show the first rebound in home prices in four years, marking the end of Singapore’s housing bear.

And as the rental market begins to pick up and macro-economic conditions remain firm, home prices are expected to appreciate in 2018 by 3% to 8%.

OCBC’s top picks are City Developments, UOL and Wheelock Properties with fair value estimates of $12.39, $9.01 and $2.27 respectively.

In a Thursday report, lead analyst Eli Lee says, “While the consensus is that the bottom in the property market lies shortly ahead, we believe that the trough is in fact behind us and Singapore home prices likely hit their cyclical lows in mid-Jun 2017.”

The research house’s view was further bolstered by URA’s upward adjustment to its 2Q17 flash estimate of -0.3% to -0.1% when then official statistic was released and all caveats in June were accounted for.

This shows that home prices improved during the last few weeks on June given the firm market conditions. OCBC believes that this uptrend is likely continued in 3Q17.

In addition, sales volumes and takeup rates in the primary market further strengthened over July and August, further supporting OCBC’s view.

In the two months, new home sales increased 35% y-o-y to 3,672 units, while takeup rate improved 193% y-o-y from 131% last year. Unsold launched units in the market also fell to 4,294 units as at end-August compared to 5,828 units in end-June.

OCBC’s channel checks showed that price expectations of developers and home sellers in the secondary market have risen in the past few months, while prices at new launches have also increased.

As at 11.55pm, shares in City Developments, UOL and Wheelock are trading at $11.27, $8.17 and $1.88 respectively.