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Thread: Housing glut or not, worries remain

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    Default Housing glut or not, worries remain

    http://www.todayonline.com/Business/...worries-remain

    Housing glut or not, worries remain

    by Colin Tan

    04:45 AM Jul 01, 2011


    The expected surge in the supply of new Housing and Development Board (HDB) flats and private homes over the next few years will not lead to a housing glut in 2013/ 2014, according to a recent Citigroup property report that made news for its contrarian view.

    Citigroup's analysis looks at Singapore's housing stock in totality, taking into account both private and public housing, saying they are closely linked. It says a prolonged period of under-building in the 2000s has resulted in the current severe housing shortage. This is likely to provide continued support for mass market prices and demand.

    The team behind the report estimates that the deficit in housing units is in excess of 50,000 currently and this undersupply will likely take several years to clear, just like the oversupply situation in the early 2000s.

    I do not totally disagree with their view. If you examine the facts, there was definitely serious under-building, especially in the public housing sector, the repercussions of which we are feeling now. What you may dispute is the extent of the under-building.

    I am not sure if the team realises it but it was describing all the ingredients coming together for the perfect bull run that we are experiencing now, as opposed to the perfect storm that some are predicting that the market will face in two to three years' time.

    The decade of under-building has led to a strong build-up of pent-up demand. Throw in a loose immigration policy, the strong stimulus provided by the integrated resorts and other infrastructure projects leading to a spectacular 14.5-per-cent gross domestic product growth rate last year, abnormally low interest rates and a liberal foreign ownership policy with respect to property and you have the perfect bull run.

    The run-up has been sufficiently strong to fully negate the effects of four rounds of property market cooling measures. It has yet to be tamed as the market is still running on many legs - one of which is the low-interest-rate environment, which will likely persist in the near future.

    However, even if one holds the view that there will be no property glut in 2013/2014, it does not mean that our worries are over. We cannot preclude that one can quickly build up later.

    It is already evident that there are imbalances in the different housing segments even if there is an overall equilibrium - oversupply in the upper tiers and a shortage in the lower tiers.

    In a rapidly rising market where prices rise faster than household incomes, the imbalances will worsen. If prices do not correct soon to re-align the mismatch, more supply may need to be announced to correct the severe shortage in the lower tiers. This can quickly build up into a glut even if one does not exist now.

    If you subscribe to the view that there will be equilibrium by 2013/ 2014, what it means is that there is a limit to the price downside when the market corrects. Prices will fall until they reach the support level that matches all units with occupiers. In other words, we will have a sharp correction but no crash. But if you feel that there will be a glut between now and 2013, a price correction can be severe as there will simply be more housing units than occupiers.

    Finally, the profile of buyers in the HDB resale market for May showed that private property owners (8 per cent) and permanent residents (20 per cent) still make up a sizeable chunk. Last year, then National Development Minister Mah Bow Tan revealed - before the implementation of the new rules - that 10 per cent of buyers in the resale HDB market were private property owners, while PRs made up 20 per cent.

    The latest numbers seem to suggest that the new rules have been ineffective. On the contrary, I feel the measures have worked. What we are seeing are probably single-property private owners who are downgrading, owing to en-bloc sales or otherwise.

    The indications from agents are that resale volumes have fallen drastically in May. So 8 per cent and 20 per cent on a sharply reduced volume is much smaller in absolute numbers. In fact, most private property owners and PRs who bought in May probably had little choice, unlike citizens who have the option to buy new Build-To-Order flats.



    Colin Tan is head, research and consultancy, at Chesterton Suntec International.

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    Default what's the data

    the equation contains 2 sides:
    1) demand: number of people wanting to buy a HDB or Condo
    2) supply: number of HDB or Condo being build

    if demand > supply = shortage
    if demand < supply = surplus

    I like to ask if anyone know where we can get an estimate of:

    1) how many people are coming into the demand market each month
    2) how many people are leaving the demand market each month
    3) how many people are still in the market

    based on what our Housing Minister says, there may be a glut. However, that is assuming the number of people buying is going to decrease over the years while the number of houses supplied is going to increase over the years.

    If anyone can correct me, please do.
    Many thanks for your kind reply.



    Quote Originally Posted by mr funny
    http://www.todayonline.com/Business/...worries-remain

    Housing glut or not, worries remain

    by Colin Tan

    04:45 AM Jul 01, 2011


    The expected surge in the supply of new Housing and Development Board (HDB) flats and private homes over the next few years will not lead to a housing glut in 2013/ 2014, according to a recent Citigroup property report that made news for its contrarian view.

    Citigroup's analysis looks at Singapore's housing stock in totality, taking into account both private and public housing, saying they are closely linked. It says a prolonged period of under-building in the 2000s has resulted in the current severe housing shortage. This is likely to provide continued support for mass market prices and demand.

    The team behind the report estimates that the deficit in housing units is in excess of 50,000 currently and this undersupply will likely take several years to clear, just like the oversupply situation in the early 2000s.

    I do not totally disagree with their view. If you examine the facts, there was definitely serious under-building, especially in the public housing sector, the repercussions of which we are feeling now. What you may dispute is the extent of the under-building.

    I am not sure if the team realises it but it was describing all the ingredients coming together for the perfect bull run that we are experiencing now, as opposed to the perfect storm that some are predicting that the market will face in two to three years' time.

    The decade of under-building has led to a strong build-up of pent-up demand. Throw in a loose immigration policy, the strong stimulus provided by the integrated resorts and other infrastructure projects leading to a spectacular 14.5-per-cent gross domestic product growth rate last year, abnormally low interest rates and a liberal foreign ownership policy with respect to property and you have the perfect bull run.

    The run-up has been sufficiently strong to fully negate the effects of four rounds of property market cooling measures. It has yet to be tamed as the market is still running on many legs - one of which is the low-interest-rate environment, which will likely persist in the near future.

    However, even if one holds the view that there will be no property glut in 2013/2014, it does not mean that our worries are over. We cannot preclude that one can quickly build up later.

    It is already evident that there are imbalances in the different housing segments even if there is an overall equilibrium - oversupply in the upper tiers and a shortage in the lower tiers.

    In a rapidly rising market where prices rise faster than household incomes, the imbalances will worsen. If prices do not correct soon to re-align the mismatch, more supply may need to be announced to correct the severe shortage in the lower tiers. This can quickly build up into a glut even if one does not exist now.

    If you subscribe to the view that there will be equilibrium by 2013/ 2014, what it means is that there is a limit to the price downside when the market corrects. Prices will fall until they reach the support level that matches all units with occupiers. In other words, we will have a sharp correction but no crash. But if you feel that there will be a glut between now and 2013, a price correction can be severe as there will simply be more housing units than occupiers.

    Finally, the profile of buyers in the HDB resale market for May showed that private property owners (8 per cent) and permanent residents (20 per cent) still make up a sizeable chunk. Last year, then National Development Minister Mah Bow Tan revealed - before the implementation of the new rules - that 10 per cent of buyers in the resale HDB market were private property owners, while PRs made up 20 per cent.

    The latest numbers seem to suggest that the new rules have been ineffective. On the contrary, I feel the measures have worked. What we are seeing are probably single-property private owners who are downgrading, owing to en-bloc sales or otherwise.

    The indications from agents are that resale volumes have fallen drastically in May. So 8 per cent and 20 per cent on a sharply reduced volume is much smaller in absolute numbers. In fact, most private property owners and PRs who bought in May probably had little choice, unlike citizens who have the option to buy new Build-To-Order flats.



    Colin Tan is head, research and consultancy, at Chesterton Suntec International.

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    Quote Originally Posted by tericia
    the equation contains 2 sides:
    1) demand: number of people wanting to buy a HDB or Condo
    2) supply: number of HDB or Condo being build

    if demand > supply = shortage
    if demand < supply = surplus

    I like to ask if anyone know where we can get an estimate of:

    1) how many people are coming into the demand market each month
    2) how many people are leaving the demand market each month
    3) how many people are still in the market

    based on what our Housing Minister says, there may be a glut. However, that is assuming the number of people buying is going to decrease over the years while the number of houses supplied is going to increase over the years.

    If anyone can correct me, please do.
    Many thanks for your kind reply.
    You forgot - no. of people coming/leaving rental market.
    Its not just the people interest in buying, but people interested in renting which might be bigger factor in coming years.

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    Quote Originally Posted by tericia
    the equation contains 2 sides:
    1) demand: number of people wanting to buy a HDB or Condo
    2) supply: number of HDB or Condo being build

    if demand > supply = shortage
    if demand < supply = surplus

    I like to ask if anyone know where we can get an estimate of:

    1) how many people are coming into the demand market each month
    2) how many people are leaving the demand market each month
    3) how many people are still in the market

    based on what our Housing Minister says, there may be a glut. However, that is assuming the number of people buying is going to decrease over the years while the number of houses supplied is going to increase over the years.

    If anyone can correct me, please do.
    Many thanks for your kind reply.
    This Minister has access to immigration projection from ICA, profiles of HDB resale buyers n transactions, URA caveats n developers' pipeline n many more. Juz get 2 or 3 statisticians to churn out supply n demand. If Minister says glut, then there will b glut.

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    If they duno, who knows?

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    Quote Originally Posted by kingkong1984
    If they duno, who knows?
    i know, god knows. The time will come when the wrath of god strikes

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    Quote Originally Posted by dtrax
    i know, god knows. The time will come when the wrath of god strikes
    ahaha... right..

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    Quote Originally Posted by dtrax
    i know, god knows. The time will come when the wrath of god strikes
    Dont need god.. think KBW is enought

    KBW seems to tackle prices from supply side.. and if supply keeps coming.. u dont need god..prices will fall anyway

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    Property agent knows Cos when I qn them they always tell me what can KBW do when market is so hot?

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    Quote Originally Posted by Andrew76
    Property agent knows Cos when I qn them they always tell me what can KBW do when market is so hot?
    Thats the property agents for you..

    when buy..property so hot..buy buy at higher
    when sell.. property cold..sell sell at lower

    ..all they care is u buy and sell fast fast

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    Plus big fat commissions!!!

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    My view is, we better keep quiet while market is doing well, too many news on ppty price going up will only lead to our minister to launch cooling measure. Please don't stir the water if it looks too clear, otherwise he will make sure perfect storm is in the making. I guess all ppty players know what's going on here, so dont have to purposely publish to the whole world that we have a bull run. For those who thinks that a perfect storm is coming, they might be right too. Please publish those news too.

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    Don't need us to publish any perfect storm or other news. Our dear Mr K has been talking to developers and housing agents who'll only tell him one thing... the housing market is growing steadily and at a very healthy rate so no need CMs. If CM, both developers and agents will suffer big time so they won't say anything to jeapordize that! We don't even have the chance to stir any much disturbance in that respect! Its bull run for now but the bear is lurking by the corner, waiting to pounce where possible!

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    Quote Originally Posted by joelx
    My view is, we better keep quiet while market is doing well, too many news on ppty price going up will only lead to our minister to launch cooling measure. Please don't stir the water if it looks too clear, otherwise he will make sure perfect storm is in the making. I guess all ppty players know what's going on here, so dont have to purposely publish to the whole world that we have a bull run. For those who thinks that a perfect storm is coming, they might be right too. Please publish those news too.
    Can't help it now.. just look at new blog my KBW..
    After the false reporting by BT, KBW is the one doing the explanation..

    Actually KBW is now in a tricky situation, by telling buyers to wait for 2013-2014 crash
    If no crash and higher prices..come election 2016 they gonna have even bigger mess this time..

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    Quote Originally Posted by rockinsg
    Can't help it now.. just look at new blog my KBW..
    After the false reporting by BT, KBW is the one doing the explanation..

    Actually KBW is now in a tricky situation, by telling buyers to wait for 2013-2014 crash
    If no crash and higher prices..come election 2016 they gonna have even bigger mess this time..
    Another way of interpreting this is he'll ensure the crash to come in 2013/14. Anyway, 2013 crash is ideal for him because it takes about 2 to 3 years for the housing market to recover and that would be the next election time and everybody would be happy with the recovery so he'll just secure his votes by then... good thinking Mr K.

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    Dun need to go interprete what he's talking about.. His latest blog post is really unnecessary.. He should have just kept quiet and act hero to advertise his July BTOs.. Strange move by him.. Or maybe he shag from the job liao..

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    For all you know and care, it may well be a decoy or a well designed distraction from some other concerns which might be surfacing soon? Hmm.... who knows what he has up his sleeve? Then again yes maybe he's totally washed out from his consistent blog postings!

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    Quote Originally Posted by linchong84
    Dun need to go interprete what he's talking about.. His latest blog post is really unnecessary.. He should have just kept quiet and act hero to advertise his July BTOs.. Strange move by him.. Or maybe he shag from the job liao..
    "I hope our media can do their part too. There is some panic buying out there, by people worried that prices will continue to rise. "

    Is he saying prices won't rise?

    He really need to stop blogging.. he's saying too much and just creating trouble for him if he can't control prices....

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    Well he certainly appear confident by blogging so much and advising so much. The more he blogs, the more worrisome it becomes because it only goes to show that he'll surely do something about what he's promised! Yes so please stop blogging!

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    Default Fall or Rise 7 consecutive quarter.

    Anyone want to guess, the prices fall or rise 7 consecutive quarter.

    Increase in private property prices falls for 7th consecutive quarter

    http://business.asiaone.com/Business...01-287056.html



    http://www.ura.gov.sg/pr/text/2011/pr11-87.html

    1 July 2011

    Rate of increase of private residential property prices falls further in 2nd quarter 2011

    According to URA's flash estimate of the private residential property index for 2nd Quarter 2011, the rate of increase in private residential property prices has fallen for the 7th consecutive quarter since 4th Quarter 2009.

    Based on the flash estimate, prices rose from 199.1 points in 1st Quarter 2011 to 202.8 points in 2nd Quarter 2011. This represents an increase of 1.9%, compared with 2.2% in the previous quarter (see Annex A).

    Prices of non-landed private residential properties increased by 1.6% in Core Central Region and Outside Central Region, and 1.2% in Rest of Central Region in the quarter (see Annex B). In comparison, in 1st Quarter 2011, prices of non-landed private residential properties increased by 1.1% in Core Central Region, 2.0% in Rest of Central Region and 3.1% in Outside Central Region.

    The flash estimates are compiled based on transaction prices given in caveats lodged during the first ten weeks of the quarter supplemented by information on the number of new units sold. The statistics will be updated 4 weeks later when URA releases the full 2nd Quarter 2011 real estate statistics, when more data on the caveats lodged and the take-up of new projects are captured. Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution.

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    If this is any comfort for potential home sellers, it merely suggests that KBW will not be too eager to introduce any CM because housing prices are still rising, which signals a healthy housing market which he wants, but probably stablizing from those mad figures from last year which is also what he wants!

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    Quote Originally Posted by ysyap
    Well he certainly appear confident by blogging so much and advising so much. The more he blogs, the more worrisome it becomes because it only goes to show that he'll surely do something about what he's promised! Yes so please stop blogging!
    Quote from MND

    "I have been in MND for 5 weeks, and not sleeping well. I am working my guts out to try to calm the market, for the good of all Singaporeans.

    But I can’t do it alone. I need all to help.

    HDB architects are working round the clock to ramp up BTO supply. Contractors are building up capacity to deliver the flats on time. HDB is setting BTO prices carefully to help guide the market.

    I hope our media can do their part too. There is some panic buying out there, by people worried that prices will continue to rise. Sensationalised articles will merely feed the frenzy.

    If only BT had verified the facts, the misleading article could have been avoided. Please help to circulate this blog to your friends.
    "

    http://mndsingapore.wordpress.com/

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    Quote Originally Posted by Arcachon
    Quote from MND

    "I have been in MND for 5 weeks, and not sleeping well. I am working my guts out to try to calm the market, for the good of all Singaporeans.

    But I can’t do it alone. I need all to help.

    HDB architects are working round the clock to ramp up BTO supply. Contractors are building up capacity to deliver the flats on time. HDB is setting BTO prices carefully to help guide the market.

    I hope our media can do their part too. There is some panic buying out there, by people worried that prices will continue to rise. Sensationalised articles will merely feed the frenzy.

    If only BT had verified the facts, the misleading article could have been avoided. Please help to circulate this blog to your friends."

    http://mndsingapore.wordpress.com/
    You certainly are doing your part to circulate this blog in this forum... He appeared to be in distress! Is he feeling defeated, after all the good work only to be undone by first Sim Lian and now the Business Times? More to follow...

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    Quote Originally Posted by tericia
    the equation contains 2 sides:
    1) demand: number of people wanting to buy a HDB or Condo
    2) supply: number of HDB or Condo being build

    if demand > supply = shortage
    if demand < supply = surplus

    I like to ask if anyone know where we can get an estimate of:

    1) how many people are coming into the demand market each month
    2) how many people are leaving the demand market each month
    3) how many people are still in the market

    based on what our Housing Minister says, there may be a glut. However, that is assuming the number of people buying is going to decrease over the years while the number of houses supplied is going to increase over the years.

    If anyone can correct me, please do.
    Many thanks for your kind reply.
    We can never estimate demand.....jus one black swan event like subprime, all newly wed can aso delay getting a bto flat....hahaha

    But supply can estimate based on land sale n new launches

    Tats y we got boom bust cycle mah rite....

    So all these supply n demand equation is jus crap

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    I suspect the mass release of private land for sale is more for psychological effect than having any actual impact on the private housing supply side.

    In reality there is a minimum tender price for the land release, if a glut comes developers will bid cautiously. If the strike price falls below URA's minimum, there will be not any land released.

    KBW is not stupid, his priority is to quell the citizen's discontent with public housing. People who want private housing will be left to fend for themselves. The latest cooling measures is already very restrictive and protects the banks more than the consumer. Crashing the market does not do any one any good.

    That said, a flood of ready HDB will certainly tilt the balance of the overall supply.

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    Quote Originally Posted by howgozit
    That said, a flood of ready HDB will certainly tilt the balance of the overall supply.
    A bit too late...

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    attended the property insight talk yesterday by ERA.
    The ERA spokeman mentioned that, after talking to Mr M, it appeared that there will not be CM for private property in the near future. Whereas in the coming weeks, there will be measures on the controls of COV.

    Doubt how can it be achieved with the free market force

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    Who started and legalised COV for HDB?

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    If COV is scrapped, HDB resale prices can potentially be controlled since banks will valuate accordingly to recent sales made. However banks might abuse and just issue the loan to the buyer, pushing valuation even higher since COV cannot be done.

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    Quote Originally Posted by Laguna
    attended the property insight talk yesterday by ERA.
    The ERA spokeman mentioned that, after talking to Mr M, it appeared that there will not be CM for private property in the near future. Whereas in the coming weeks, there will be measures on the controls of COV.

    Doubt how can it be achieved with the free market force
    Who's Mr M?

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