View Full Version : 6.9m Population by 2030 – Good or Bad for Property?
By Mr. Propwise
There’s been so much talk (and hype) about the Government’s recently released Population White Paper and Land Use Plan to support up to a 6.9 million population in 2030, but I think at the end of the day most people are still confused about one key question – is the long term growth plan for Singapore’s population and the related land use plans good or bad for property prices?
A quick recap of the population growth plan
Singapore had 3.29 million citizens and 0.53 million Permanent Residents (PRs) as at June 2012, which together make up the resident population. We also had a non-resident population (including domestic workers, foreign talent, students etc) of 1.49 million, giving a total population of 5.31 million.
Singapore’s total population in 2020 is projected to be between 5.8 and 6 million, while by 2030, the total population could range between 6.5 and 6.9 million.
Singapore needs immigrants to grow, but…
Due to our extremely low birth rates (as measured by the Total Fertility Rate), Singaporeans will age rapidly and the number of citizens will decline from 2025 if there is no immigration.
To prevent this from happening, Singapore needs to bring in 15,000 to 25,000 new citizens each year. And in order to do that, the Government will have to grant around 30,000 PRs each year, maintaining the PR population to between 0.5 and 0.6 million as a potential pool that will to convert to new citizens.
But due mainly to political pressures, the Government has reduced the number of PRs granted, from a high of 79,000 new PRs in 2008 to about 30,000 each year currently. Going forward, this pace will be maintained to keep the total PR population stable. In other words, immigration will not be a big driver of the property market anymore.
Population growth to slow over the next two decades
The bottomline is that total population growth will slow from the annualized rate of 2.5% from 2000 to 2010, to 1.3% to 1.6% from 2010 to 2020, and further slow to 1.1% to 1.4% from 2020 to 2030.
This deceleration of the growth rate is clearly not supportive of the future demand growth for residential property. But to figure out the impact on prices, we’ll have to take a look at the other side of the equation – the supply of property.
Housing supply to be ramped up
The huge number of 700,000 new homes that could be built by 2030 has been thrown around a lot – what does it actually mean?
If we look at the current total stock of housing in Singapore, this comprises around 1.2 million units, of which 0.9 million are HDB flats. An additional 700,000 units is a 58% increase in the total stock, whereas the population increase from 5.31 million to 6.9 million (the upper end of the 2030 range) is a 30% increase. In other words, additional new supply is potentially going to be growing twice as fast as population growth – not a good sign for the market.
Of these 700,000 new homes, 90,000 private units (including Executive Condominiums) and 110,000 public units will be completed by 2016. This means that in the next three years, the total stock of housing will increase by 17%, while the population will likely grow by 5% or less over the same time period. Suffice to say, this “flood” of new supply will pose a threat to property prices.
Also due to political pressure, the Government will ramp up the Build-to-Order (BTO) supply of public housing from 8,800 units in 2009 to 16,000 units in 2010, 25,000 units in 2011 and 27,000 units in 2012. These are not small numbers – the total number of units launched in 2011 and 2012 is larger than the number of existing units in the whole of Ang Mo Kio. On top of this, HDB will launch at least 20,000 BTO units in 2013.
Changes to the land use plan
The 6.5 to 6.9 million population by 2030 and 700,000 new housing units will require 76,600 hectares (ha) of land, an increase from the current supply of 71,000 ha.
This increased supply of land will come from reclaiming more land, using up the land reserve, intensifying land use, and converting some old industrial areas and golf courses for residential use.
The rail network will be expanded significantly, and there will also be the development of new towns and estates, such as in Bidadari, Tampines North and Tengah.
Thus while the big picture in terms of housing demand and supply do not look good, there could be some area-specific opportunities from the expansion of the rail network, opening up of new growth corridors, and decentralization of the business and commercial districts.
The Golden Years are over
I’ll put it bluntly – the record home sales we’ve seen in recent years are clearly not sustainable. They are the result of a confluence of rapid non-citizen population growth and sustained low interest rates post the Global Financial Crisis.
Going forward, immigration will be controlled and will not be a driver of home sales. Total population growth will slow and will grow at much slower rate than housing supply. There is a large amount of housing supply coming up in the next three years. Interest rates will not stay low forever. Do you really need me to join the dots?
By Mr. Propwise
Housing supply to be ramped up
The huge number of 700,000 new homes that could be built by 2030 has been thrown around a lot – what does it actually mean?
If we look at the current total stock of housing in Singapore, this comprises around 1.2 million units, of which 0.9 million are HDB flats. An additional 700,000 units is a 58% increase in the total stock, whereas the population increase from 5.31 million to 6.9 million (the upper end of the 2030 range) is a 30% increase. In other words, additional new supply is potentially going to be growing twice as fast as population growth – not a good sign for the market.
Of these 700,000 new homes, 90,000 private units (including Executive Condominiums) and 110,000 public units will be completed by 2016. This means that in the next three years, the total stock of housing will increase by 17%, while the population will likely grow by 5% or less over the same time period. Suffice to say, this “flood” of new supply will pose a threat to property prices.
Also due to political pressure, the Government will ramp up the Build-to-Order (BTO) supply of public housing from 8,800 units in 2009 to 16,000 units in 2010, 25,000 units in 2011 and 27,000 units in 2012. These are not small numbers – the total number of units launched in 2011 and 2012 is larger than the number of existing units in the whole of Ang Mo Kio. On top of this, HDB will launch at least 20,000 BTO units in 2013.
Too surface analysis. One major flaw in the argument. What is the household size of the current 1.2million (0.9 public, the rest pte) housing? I am pretty sure current is about 4 to a family, on average.
The projected increase in population from 5.31 million to 6.9 million, is 1.6million. If 3 to a household, that would translate to a need of 533k homes needed. If 2 to a household, that would mean about 800k homes needed. So 700k is pretty reasonable number.
Whoever write that article need to tell the gov to sell GLS at constant price for the next 20 years
By Mr. Propwise
There’s been so much talk (and hype) about the Government’s recently released Population White Paper and Land Use Plan to support up to a 6.9 million population in 2030, but I think at the end of the day most people are still confused about one key question – is the long term growth plan for Singapore’s population and the related land use plans good or bad for property prices?
A quick recap of the population growth plan
Singapore had 3.29 million citizens and 0.53 million Permanent Residents (PRs) as at June 2012, which together make up the resident population. We also had a non-resident population (including domestic workers, foreign talent, students etc) of 1.49 million, giving a total population of 5.31 million.
Singapore’s total population in 2020 is projected to be between 5.8 and 6 million, while by 2030, the total population could range between 6.5 and 6.9 million.
Singapore needs immigrants to grow, but…
Due to our extremely low birth rates (as measured by the Total Fertility Rate), Singaporeans will age rapidly and the number of citizens will decline from 2025 if there is no immigration.
To prevent this from happening, Singapore needs to bring in 15,000 to 25,000 new citizens each year. And in order to do that, the Government will have to grant around 30,000 PRs each year, maintaining the PR population to between 0.5 and 0.6 million as a potential pool that will to convert to new citizens.
But due mainly to political pressures, the Government has reduced the number of PRs granted, from a high of 79,000 new PRs in 2008 to about 30,000 each year currently. Going forward, this pace will be maintained to keep the total PR population stable. In other words, immigration will not be a big driver of the property market anymore.
Population growth to slow over the next two decades
The bottomline is that total population growth will slow from the annualized rate of 2.5% from 2000 to 2010, to 1.3% to 1.6% from 2010 to 2020, and further slow to 1.1% to 1.4% from 2020 to 2030.
This deceleration of the growth rate is clearly not supportive of the future demand growth for residential property. But to figure out the impact on prices, we’ll have to take a look at the other side of the equation – the supply of property.
Housing supply to be ramped up
The huge number of 700,000 new homes that could be built by 2030 has been thrown around a lot – what does it actually mean?
If we look at the current total stock of housing in Singapore, this comprises around 1.2 million units, of which 0.9 million are HDB flats. An additional 700,000 units is a 58% increase in the total stock, whereas the population increase from 5.31 million to 6.9 million (the upper end of the 2030 range) is a 30% increase. In other words, additional new supply is potentially going to be growing twice as fast as population growth – not a good sign for the market.
Of these 700,000 new homes, 90,000 private units (including Executive Condominiums) and 110,000 public units will be completed by 2016. This means that in the next three years, the total stock of housing will increase by 17%, while the population will likely grow by 5% or less over the same time period. Suffice to say, this “flood” of new supply will pose a threat to property prices.
Also due to political pressure, the Government will ramp up the Build-to-Order (BTO) supply of public housing from 8,800 units in 2009 to 16,000 units in 2010, 25,000 units in 2011 and 27,000 units in 2012. These are not small numbers – the total number of units launched in 2011 and 2012 is larger than the number of existing units in the whole of Ang Mo Kio. On top of this, HDB will launch at least 20,000 BTO units in 2013.
Changes to the land use plan
The 6.5 to 6.9 million population by 2030 and 700,000 new housing units will require 76,600 hectares (ha) of land, an increase from the current supply of 71,000 ha.
This increased supply of land will come from reclaiming more land, using up the land reserve, intensifying land use, and converting some old industrial areas and golf courses for residential use.
The rail network will be expanded significantly, and there will also be the development of new towns and estates, such as in Bidadari, Tampines North and Tengah.
Thus while the big picture in terms of housing demand and supply do not look good, there could be some area-specific opportunities from the expansion of the rail network, opening up of new growth corridors, and decentralization of the business and commercial districts.
The Golden Years are over
I’ll put it bluntly – the record home sales we’ve seen in recent years are clearly not sustainable. They are the result of a confluence of rapid non-citizen population growth and sustained low interest rates post the Global Financial Crisis.
Going forward, immigration will be controlled and will not be a driver of home sales. Total population growth will slow and will grow at much slower rate than housing supply. There is a large amount of housing supply coming up in the next three years. Interest rates will not stay low forever. Do you really need me to join the dots?
almost everything we do we need to queue, lost of jobs. nothing benefits us. year 2030 many will stay home watch TV & read headline "heavy traffic jamed in singapore" just imagine how much we have to pay for taxi fare per trip?
buy good house and rest at home.
You have crystallised your points quite cogently. At the end of the day, there are many variables too. The population increase and influx of immigrants are variables. So are the 700,000 homes being talked about. Now, the men in white are using words like "projection" and "worse case scenarios." The reason that economists are seldom right in their predictions is because economics is not an exact science. I guess we could say the same thing here about whither the property market. Those who are perpetually and profoundly bullish may be in for a shock. The good years simply do not last forever. Human perceptions and sentiments come into play. And so a downturn could well be on the cards. Who really knows for sure? The best is yet to come . . . but a blip is overdue.
This article assuming the future cost at today prices. Reclaimed land doesn't come cheap today, certainly not in the future. It doesn't take into account the cost of inflation. The future cost of construction labour. Indonesia has land size million times of the sg. How come the price of property increase many times more than sg?. The best to derscibe this article is extremely naïve.
phantom_opera
05-02-13, 13:55
Just one simple question: would sg garmen willing to price the lands way below international market value??? ... isn't that ripping of reserve?? :rolleyes:
our BTO is heavily subsidized if you look at HK property prices ... surely some part of the subsidy has to come from private land sales ... so SG garmen will never sell lands way below international valuation
Too surface analysis. One major flaw in the argument. What is the household size of the current 1.2million (0.9 public, the rest pte) housing? I am pretty sure current is about 4 to a family, on average.
The projected increase in population from 5.31 million to 6.9 million, is 1.6million. If 3 to a household, that would translate to a need of 533k homes needed. If 2 to a household, that would mean about 800k homes needed. So 700k is pretty reasonable number.
Another point which is not mentioned is the demolition of old buildings through enbloc (private or SERS). The assumption made by the writer (propwise) is that the 1.2m residential units remains constant which is unlikely to be the case. Furthermore, its also quite apparently some of these 700,000 additional supply is to make up for the under-building of yesteryears. All in all, i think current prices is the new norm, it might correct if there are major shocks, but this is the new price level and the upcoming supply is really to keep prices from accelerating too much ahead of fundamentals...not so much to crash the ppty mkt. A crashed mkt can actually be worst off for the poor and I doubt the govt wants that to happen.
Building 700.000 new residential units is like building a new singapore from scratch. It is not within the sg government ability to build that much units in a hurry. It is more like a statistician dream. If each unit cost 500K then the whole project is costing 350 billion dolar. Well above of national GDP of 239 billion. Getting people in is easy, u can do it tomorrow. Getting housing built is not easy. I am not so easily trusting any report anymore now.
To build 700k homes is not easy now as they strict number of foreign workers in.
Some projects are going slow, expect TOP date to be delayed.
By Mr. Propwise
Housing supply to be ramped up
The huge number of 700,000 new homes that could be built by 2030 has been thrown around a lot – what does it actually mean?
If we look at the current total stock of housing in Singapore, this comprises around 1.2 million units, of which 0.9 million are HDB flats. An additional 700,000 units is a 58% increase in the total stock, whereas the population increase from 5.31 million to 6.9 million (the upper end of the 2030 range) is a 30% increase. In other words, additional new supply is potentially going to be growing twice as fast as population growth – not a good sign for the market.
Of these 700,000 new homes, 90,000 private units (including Executive Condominiums) and 110,000 public units will be completed by 2016. This means that in the next three years, the total stock of housing will increase by 17%, while the population will likely grow by 5% or less over the same time period. Suffice to say, this “flood” of new supply will pose a threat to property prices.
Also due to political pressure, the Government will ramp up the Build-to-Order (BTO) supply of public housing from 8,800 units in 2009 to 16,000 units in 2010, 25,000 units in 2011 and 27,000 units in 2012. These are not small numbers – the total number of units launched in 2011 and 2012 is larger than the number of existing units in the whole of Ang Mo Kio. On top of this, HDB will launch at least 20,000 BTO units in 2013.
The Golden Years are over
I’ll put it bluntly – the record home sales we’ve seen in recent years are clearly not sustainable. They are the result of a confluence of rapid non-citizen population growth and sustained low interest rates post the Global Financial Crisis.
Going forward, immigration will be controlled and will not be a driver of home sales. Total population growth will slow and will grow at much slower rate than housing supply. There is a large amount of housing supply coming up in the next three years. Interest rates will not stay low forever. Do you really need me to join the dots?
Both DPM Therman and Mr Khaw had said in no uncertain term that the current inbalance in supply and demand would be sorted out within the next few years. Going forward, the government would ensure that there is enough buffer (supply) and the holding cost the government now recognises the need to bear to ensure price stability.
if one already vested in property and intend to invest further obviously will support 6.9M population?
Just one simple question: would sg garmen willing to price the lands way below international market value??? ... isn't that ripping of reserve?? :rolleyes:
our BTO is heavily subsidized if you look at HK property prices ... surely some part of the subsidy has to come from private land sales ... so SG garmen will never sell lands way below international valuation
even if garmen price below international market value can it be guarantee the developers dont sell at international prices ?
The market speak for itself... Anyway I really don't think we will go 6.9 million... They have to give in or risk losing power in GE 2016. I believe the white paper maybe amend in order to go through.. Or else we will have a good show in 2016
too simplistic in view ... given that population injestion can be controlled ... the govt will well space out the construction of housing to be slightly ahead of the inflow .. thereby controlling and stabilizing the market while ensuring the price growth did not accelerate as of current ..
For GLS, the current practice is Govt sell to highest bidder almost all the time. Like the COE. The more the market wants it, the higher the bidder price. And of course, will award to the highest bidder, no brainer sales. There will never be a constant price. It is how hungry the bidder is.
Whoever write that article need to tell the gov to sell GLS at constant price for the next 20 years
if one already vested in property and intend to invest further obviously will support 6.9M population?
no i do not support 7m population. It is insane. a property is nothing if its surrounding environment sucks.
money cannot buy true love :tongue3:
nobody likes to be crowded out ... current situation is already insane ...
I avoid weekend shopping and normally shop during office hours ...
that's the only "quality shopping" time left in SG
no i do not support 7m population. It is insane. a property is nothing if its surrounding environment sucks.
phantom_opera
05-02-13, 21:11
even if garmen price below international market value can it be guarantee the developers dont sell at international prices ?
well said ... if Beijing is at 3000psf and HK at 4000psf ... Singapore at 1200psf will be too cheap to be true ... everybody will buy even there is 10-15% ABSD :rolleyes: you have to keep increasing your foreigner ABSD whenever price gap widens further ... and at the end foreigners will buy through their SC/SPR relatives
money cannot buy true love :tongue3:
http://cl.jroo.me/z3/Z/k/I/d/a.aaa-The-true-love-exist.jpg
well said ... if Beijing is at 3000psf and HK at 4000psf ... Singapore at 1200psf will be too cheap to be true ... everybody will buy even there is 10-15% ABSD :rolleyes: you have to keep increasing your foreigner ABSD whenever price gap widens further ... and at the end foreigners will buy through their SC/SPR relatives
maybe the likes of tony leung, maggie cheung, tavia yeung will migrate to singapore!! then there will be hope for local chinese movie and drama serials :D
http://cl.jroo.me/z3/Z/k/I/d/a.aaa-The-true-love-exist.jpg
lol!! :D:D:D:cheers5:
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