Market watchers warn of oversupply of private homes

[sleek]

Market watchers warn of oversupply of private homes
By Joanne Chan | Posted: 11 June 2011 2054 hrs

SINGAPORE: Market watchers have said there may be an oversupply of private homes in two to three years' time, when most developments are completed.

They cautioned that while a good economy may see these units gradually taken up, a downturn will send the property market into a depression.

National Development Minister Khaw Boon Wan issued a "health advisory" on his blog, urging investors and upgraders to think hard before buying a new home. He warned that "sharp property prices cannot go on forever".

Those hoping to make a profit by re-selling or renting out apartments may find themselves competing in an increasingly crowded market.

By some estimates, as many as 93,000 new homes could hit the market over the next five years.

SLP International's Executive Director of Research and Consultancy, Nicholas Mak, said there are roughly 80,000 homes currently under development. He added that this does not include government land sales parcels sold and en-bloc sales in the last six months, which can yield another 13,000 new homes.

Mr Mak said: "Those people who may have a bit of spare cash and are thinking of buying any property, perhaps as a hedge against inflation, I would sound a word of caution that they should look very carefully, look at their own finances, and also to see the property they are choosing, is it something that can be easily rented out when it's completed."

Others are optimistic that the property market will be boosted by investors from neighbouring countries.

David Poh, Senior Group District Director of PropNex, said: "Asian economies will continue to grow very strongly in the next few years, especially major foreign buyers market like China and India.

"So with these strong economies over there, with [Singapore's] good infrastructure, good government, good environment, I'm quite sure they will continue to invest in properties in Singapore."

-CNA/ac

[Regulators]

what is 93000 homes compared to the couple of million more foreigners waiting to migrate here? As the sing dollar continues to strengthen against euro currencies and USD, foreigners would want to park their money in singapore properties. no typhoon, earthquake, tsunami, nuclear leaks or any other natural disasters and a stable government and economy, factors for foreigners to consider when parking money here.

[yjcai]

To add on.

9.2% of 5 million people are millionares = 500k multi millionares in Singapore. Opening the floodgates to attract more millionares to park their money here. What is 90000+ of private condos, and maybe 400k more. I subscribe to this decade of boom theory due to abnormal low interest rate for a long time. People have no problem holding on even when interest go up to 2%+.

If you subscribe to 2014 theory, price soften and slightly higher interest rate coupled with falling demand and more supply. Quantum don't change.
Developer can just give you smaller house after 2014 if u can't afford.

Even my colleague who stay in resale hdb work for 20 years as a senior I.T staff can transit easily to a freehold condo with no sweat by just taking a normal progressive loan lo. Some even smarter wait for gov to uncap 10k income ceiling will just buy EC and pay 0 resale levy to enjoy the same facilities, don't even need to spend so much (no greed involved).

Youngsters are also too capable nowadays. When immediately graduate a decent group already can command very near 5 digit combined income just by working for the correct jobs (not even entrepreneurs) and growing. HDB cannot even afford to let them buy.

I think the key thing is still the quantum which is cheap and worse of all a very large and increasing group of young people just grad and buy private for stay and lifestyle. To them is cheap

"If you say cheap, people will just kill you, so you must say it is reasonable."

[yjcai]

Before even looking at 2014 supply and falling demand flooding the market theory, I look at the savings rate of Singaporeans, lol so much.

[teddybear]

These people always never get their fact right. I already show data that CCR completed units will be the lowest for the past 1+ decade in 2012 & remain very very low in 2013!
On the hand, OCR completed units will balloon to highest ever from 2013-2016, highest ever in don't know how many past decades!

Market watchers warn of oversupply of private homes
By Joanne Chan | Posted: 11 June 2011 2054 hrs

SINGAPORE: Market watchers have said there may be an oversupply of private homes in two to three years' time, when most developments are completed.

They cautioned that while a good economy may see these units gradually taken up, a downturn will send the property market into a depression.

National Development Minister Khaw Boon Wan issued a "health advisory" on his blog, urging investors and upgraders to think hard before buying a new home. He warned that "sharp property prices cannot go on forever".

Those hoping to make a profit by re-selling or renting out apartments may find themselves competing in an increasingly crowded market.

By some estimates, as many as 93,000 new homes could hit the market over the next five years.

SLP International's Executive Director of Research and Consultancy, Nicholas Mak, said there are roughly 80,000 homes currently under development. He added that this does not include government land sales parcels sold and en-bloc sales in the last six months, which can yield another 13,000 new homes.

Mr Mak said: "Those people who may have a bit of spare cash and are thinking of buying any property, perhaps as a hedge against inflation, I would sound a word of caution that they should look very carefully, look at their own finances, and also to see the property they are choosing, is it something that can be easily rented out when it's completed."

Others are optimistic that the property market will be boosted by investors from neighbouring countries.

David Poh, Senior Group District Director of PropNex, said: "Asian economies will continue to grow very strongly in the next few years, especially major foreign buyers market like China and India.

"So with these strong economies over there, with [Singapore's] good infrastructure, good government, good environment, I'm quite sure they will continue to invest in properties in Singapore."

-CNA/ac

[ysyap]

No cause for worry yet lah... remember our lovely govt said the FT and FW tap will allow some 16 000 foreigners in annually. Couple with our locals and newly weds, the figure may well rise to some 25 000 to 30 000 a year. That works out to be about 130 000 demands in next 5 years, still greatly overtaking the 93 000 supply, not forgetting there are some 10 000 vacant units floating in the market currently which adds up to only about 103 000, still a miserable 20 000 + units short! ... So only solution is to build more lor! Think govt won't want to close or reduce that FT and FW tap lor.

[linchong84]

No cause for worry yet lah... remember our lovely govt said the FT and FW tap will allow some 16 000 foreigners in annually. Couple with our locals and newly weds, the figure may well rise to some 25 000 to 30 000 a year. That works out to be about 130 000 demands in next 5 years, still greatly overtaking the 93 000 supply, not forgetting there are some 10 000 vacant units floating in the market currently which adds up to only about 103 000, still a miserable 20 000 + units short! ... So only solution is to build more lor! Think govt won't want to close or reduce that FT and FW tap lor.

eh.. some people do buy hdb leh.. cant be everyone buy condo..

[devilplate]

eh.. some people do buy hdb leh.. cant be everyone buy condo..

Most ft rent......

[CCR]

No cause for worry yet lah... remember our lovely govt said the FT and FW tap will allow some 16 000 foreigners in annually. Couple with our locals and newly weds, the figure may well rise to some 25 000 to 30 000 a year. That works out to be about 130 000 demands in next 5 years, still greatly overtaking the 93 000 supply, not forgetting there are some 10 000 vacant units floating in the market currently which adds up to only about 103 000, still a miserable 20 000 + units short! ... So only solution is to build more lor! Think govt won't want to close or reduce that FT and FW tap lor.

Bro.... It's not one condo to one person... Average also 1:2.8

[ysyap]

Hahaha!!! All correct!!! So what do you think our lovely govt will do when they cannot account for the huge oversupply? As I mentioned earlier (in another thread), all these numbers are actually part of govt's plan (more like MND and MOM) to secretly bring in more than 16 000 foreigners a year. They may easily project some 25 000 a year but cannot tell the angry Singaporeans yet so they just proceed with build first then tell later!!! Its pretty obvious lah! See how convenient it is for KBW. He not only can more than convince the skeptical Singaporeans of his immense efforts to meet the housing demands of locals, he can also secretly prepare the country of the huge foreigner influx which is still not announced but most certainly in the pipleline! Kill 2 birds with 1 stone! He nailed the jackpot big time! Just watch this space.

[ysyap]

Most ft rent......

Rent also need a vacant unit to rent unless its rent a room... hahaha! So its time for investors like you and I to enter the market and entice these rentors to rent rent rent! Hopefully these huge oversupply will bring prices down for us to scoop up the good bargains!!!

[Tay EG]

The oversupply problem depends on which district. Eg D1 - 4 & 9 - 11, targeting FT who have gd budget mostly paid by co. Not many TOP projects @ 2013 compare to other mass mkt projects where rental pay by FT themselves + lots of supplies upcoming.
Come 2013 & 2014, depends on where is yr property, u will get hit if wrong target audience selected for rental investment.

[ysyap]

The oversupply problem depends on which district. Eg D1 - 4 & 9 - 11, targeting FT who have gd budget mostly paid by co. Not many TOP projects @ 2013 compare to other mass mkt projects where rental pay by FT themselves + lots of supplies upcoming.
Come 2013 & 2014, depends on where is yr property, u will get hit if wrong target audience selected for rental investment.

It is extremely volatile and subjective. If economy not doing well, companies will cut down on rental allowances so CCR rental will suffer where most FT will rent from OCR instead. OCR oversupply will be overcome by opening FT/W tap so got a bit more guarantee there! Best is HDB rental. Though lower but sure bao jiat... I see so so many Chinese nationals moving into HDB le... whether is it for rent or buy as PRs, its for all to see!

[Wild Falcon]

Pls do not compared supply of 5 districts vs 23 other districts. Look at supply per sq km etc. I find the supply in 9, 10, 11 quite scary in the immediate years ahead within a very small area.

The oversupply problem depends on which district. Eg D1 - 4 & 9 - 11, targeting FT who have gd budget mostly paid by co. Not many TOP projects @ 2013 compare to other mass mkt projects where rental pay by FT themselves + lots of supplies upcoming.
Come 2013 & 2014, depends on where is yr property, u will get hit if wrong target audience selected for rental investment.

[mr funny]

http://www.businesstimes.com.sg/sub/...35940,00.html?

Published June 10, 2011

Property price surge 'cannot go on forever'

Khaw Boon Wan addresses issue close to heart of S'poreans as H2 land sales programme is released

By UMA SHANKARI


(SINGAPORE) Determined to tame the runaway property market, the government will sell vast chunks of land this year on which private homes can be built in record numbers.

The idea is to quell the fears of those who see their Singapore Dream slipping away, said National Development Minister Khaw Boon Wan.

He also highlighted that 'sharp property price increases cannot go on forever'. 'We have always recognised that unsustainable, rapid price increase brings with it enormous risks and that got us to act earlier on,' he said in his latest blog entry. 'While sharp rises are painful, sharp declines are just as disastrous.'

In particular, Mr Khaw said Singaporeans must be mindful of the dangers of oversupply - especially if foreign buying eased.

For now, it's all systems go: the government will sell new land for at least 17,510 private homes and executive condo units in 2011 - a sharp increase from 2010, when land for a then-record 13,945 new homes was sold to developers.

The Ministry of National Development (MND), which released the government land sales (GLS) programme for the second half of 2011 yesterday, plans to release 43 residential, commercial and hotel sites over the next six months.

Out of these 43 sites, 19 will be on the confirmed list, while 24 will be on the reserve list.

To address the strong demand from homebuyers and developers, 17 out of the 19 land parcels on the confirmed list will be for residential use. These 17 sites will yield 8,115 new private homes and executive condominium (EC) units.

The new supply comes on top of the land supply for 9,395 private homes and ECs that will be sold in the first half of the 2011 programme.

Even more homes may be built if any of the 13 residential sites on the reserve list - which can together yield about 6,100 homes - are triggered and sold.

Mr Khaw said that a sharply rising property market 'upsets and frightens many' and so MND has to confront the issue 'head-on'.

'Young people aspiring for the Singapore Dream get angry to see the dream seemingly slipping away. Their parents worry for them and get into panic. We have to confront this issue head-on,' Mr Khaw said.

But while MND will inject another bumper supply of residential land into the market, it will also watch out for possible pitfalls in the medium term - such as oversupply.

'Together with committed investments, some 53,000 units will be looking for buyers over the next couple of years or so. That is not a trivial number,' said Mr Khaw.

The 53,000 figure includes sites from the confirmed list of the H2 2011 GLS programme, potential supply from recently sold GLS sites, and some 34,270 unsold private homes from projects that are already under construction, as well as those projects that have been granted planning approval but are not being built yet.

In particular, Mr Khaw said that demand from foreigners can drop off sharply if external situations worsen. 'Foreign buyers . . . have been strong. In the recent quarter, they made up 16 per cent of all buyers of these private properties. Many Singaporeans also buy properties with the intention to rent them to foreigners coming here to live or work. In the event of any external shock, both foreign demand and rental demand can fall quite quickly. The impact can be serious if the drop in demand happens at a time when there is a substantial increase in supply,' he said.

In addition, interest rates will not remain low forever, he said: 'Cost of borrowing and repayment must go up and households must factor this in.'

Analysts noted that the H2 2011 GLS programme tries to balance the steady demand for housing - which is pushing prices up - against the risk of flooding the market.

Bank of America Merrill Lynch economist Chua Hak Bin noted that the supply of potential homes in the H2 2011 GLS programme remains similar to what was released in the last programme - despite slower property price increases and slowing economic growth.

Private home prices rose 2.2 per cent in Q1 this year after climbing 17.6 per cent in 2010. 'It (the second half 2011 GLS programme) should help put a cap on the risk of a housing bubble,' Dr Chua said.

Chia Siew Chuin, Colliers International's director of research & advisory, said it is evident that the residential property market remains the government's top concern right now.

In all, the second half GLS programme will supply 14,195 homes from both the confirmed and reserve lists, as well as 2.88 million square feet of commercial space and 3,750 hotel rooms. Analysts also noted that changing policy risk will continue to weigh on real estate stocks over the near term.

[mr funny]

[rattydrama]

with quite a few good plots for sale under confirmed list. What do you think the developers will react?

I think the developer should quickly sell off whatever units they have on hand and prepare for future land bid. In fact, they should release all their units for sales before they are allowed to bid for another plot of land. Gov should fine tune the policy if not house hunter cannot really beneifts from the many plots for land for sales.....

How can developers keep bidding without any regards to selling off all their existing units...?

[ysyap]

with quite a few good plots for sale under confirmed list. What do you think the developers will react?

I think the developer should quickly sell off whatever units they have on hand and prepare for future land bid. In fact, they should release all their units for sales before they are allowed to bid for another plot of land. Gov should fine tune the policy if not house hunter cannot really beneifts from the many plots for land for sales.....

How can developers keep bidding without any regards to selling off all their existing units...?

That has always been the case therefore it has always been developer's playground for the last many many years!!! High time something is done about this!!!

[CCR]

Plum site at Alexandra road.... Right beside ascentia sky... Think the price will at least be 890 psf ppr

[AK47]

16k foreigners?

Where that figure came about? Last I checked we had population growth of nearly 600k from 07 to 09. Certainly not from local births.

During the same period we had only 16k pvt and 5k hdb completed. So how many are we still short? You do the math.

Hahaha!!! All correct!!! So what do you think our lovely govt will do when they cannot account for the huge oversupply? As I mentioned earlier (in another thread), all these numbers are actually part of govt's plan (more like MND and MOM) to secretly bring in more than 16 000 foreigners a year. They may easily project some 25 000 a year but cannot tell the angry Singaporeans yet so they just proceed with build first then tell later!!! Its pretty obvious lah! See how convenient it is for KBW. He not only can more than convince the skeptical Singaporeans of his immense efforts to meet the housing demands of locals, he can also secretly prepare the country of the huge foreigner influx which is still not announced but most certainly in the pipleline! Kill 2 birds with 1 stone! He nailed the jackpot big time! Just watch this space.