Chart of the day: Will stabilising residential rents lead back to growth?

Accommodation has been in negative territory for 23 months.

Don’t get your hopes up for growth in residential rent prices, as analysts say deflationary pressures stemming from the property sector are likely to persist.

According to a report from BMI Research, coming quarters will see residential prices continue to grind lower. The accommodation category, which is dominated by imputed rental costs, has been negative for 23 consecutive months. Further, fundamentals indicate that this downtrend will persist over the near-term.

And though the rate of contraction has slipped by a margin, rental prices for residential properties continue to fall in YoY terms. BMI Research also pointed out that for non-core central properties, rental prices also tumbled in QoQ terms.

Moreover, the rate of professional immigration is likely to stay modest over the coming quarters and years, as a result of the government’s ongoing restructuring of the Singapore labour market.

Meanwhile, although the gradual drop in total private residential units under construction will provide support for a soft-landing in the medium-term, the supply of new units to the market over the near-term will stay robust. BMI Research asserted that this will keep both sale and rental prices in check.

Further, citing data from the Urban Redevelopment Authority, BMI Research noted that 23,062 private property units (including executive condominiums) will be completed between 2Q16 and 4Q16, in contrast to a total of 22,267 for the entirety of 2015.