RHB is downgrading its sector “overweight” on Singapore real estate to “neutral” on expectations of transaction volumes for 2018 to fall by 10% from the 10-15% rise previously, and for prices to stay flattish over 2H18-2019.

In a Monday report, analyst Vijay Natarajan says he expects developer margins to take a 0-15% hit from the latest round of property cooling measures, depending on the cost and timing of land purchases and based on RHB’s base case assumption of flattish-to-modest price increases over the next two years.

Going forward, he believes the latest cooling measures are also to prevent a build-up in the supply pipeline, with en-bloc purchases to hit a pause due to a growing disconnect between sellers’ and developers’ price expectations.

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