SINGAPORE (Aug 28): Singapore’s current property market is not in bubble territory and neither is is expected to crash in response to the latest cooling measures, says Savills.

In fact, revised pricing outlook for the primary residential market is still positive and prices are expected to increase by 10-12% in 2018 and 5-10% for 2019, says the global real estate services provider.

Given there is still a great deal of pent-up household liquidity in the market, Savills says property demand and prices will remain sustainable.

Since 2013, property prices have not outpaced the income growth and housing prices have remained affordable.

Meanwhile, buying interest in showflats remained even after the announcement of cooling measures.

This was unlike the Total Debt Service Ratio framework announcement in Jun 2013, after which interest levels in showflats collapsed.

According to Savills, people in the 45-59 age bracket account for significant portion of buying demand in showflats. And males in this bracket are likely to see a steady increase in population growth until 2021.

In addition, quite a few buyers are falling back on parental equity support to buy their properties, adds Savills.

And because buying demand today is primarily driven by locals and the number of foreigners buying prime properties has been declining over the years, Savills believes the increase in Additional Buyers Stamp Duty (ABSD) charges to 20% for foreigners is not as critical as it seems.

On the other hand, multiplier effects from collective sales is tremendous, as it not only in terms of wealth creation but also increases the velocity of transactions.

Also, lower rental yields may not result in fall in prices due to the strong holding power by both buyers and developers while elevated land prices limit developers’ ability to lower prices in upcoming launches.

“While we agree with most of Savills’ analysis, we are slightly less bullish on our price outlook,” says RHB analyst Vijay Natarajan in a Tuesday report.

Natarajan believes buyers are likely to resist price increases in new launches and may defer or channel their liquidity into other investment opportunities instead.

RHB’s top sector pick is CapitaLand with a $4.00 target price.

As at 10.26am, shares in CapitaLand are trading $3.44, down from $3.55 at the start of the year.