RHB Bank has upgraded its recommendation on Singapore's real estate sector to "overweight" from "neutral," driven by an expected recovery in the residential market in 2025, The Edge Singapore reported Friday.

New home sales hit 3,500 in the last quarter of 2024, signaling a shift in purchasing interest due to lower mortgage costs and a robust labor market, the report cited RHB Bank Singapore analyst Vijay Natarajan as saying.

The analyst said solid economic growth and a series of new launches should support the positive trend in new home sales this year, with primary volumes reaching between 9,000 and 10,000 units, according to the report.

Residential prices will subside by 1% to 4% amid developers' constrained pricing power, the report cited Natarajan as saying.

However, the analyst flagged main risks for the sector, including strict cooling measures for the private property market and government measures to control prices for resale Housing & Development Board flats, the report said.

Natarajan's top sector picks include City Developments (SGX:C09) and APAC Realty (SGX:CLN), the newspaper reported.

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