The Urban Redevelopment Authority (URA) has flagged the addition of a significant number of housing units to the existing supply pipeline from the redevelopment of en bloc sale sites - but analysts are not alarmed.
Among the reasons these market watchers cite is that they expect an inflow of overseas talents into Singapore to mop up the supply, and that not all these units will hit the market at the same time.
Singapore's planning authority said on Friday that, with en bloc sales having been active in the past year or two, about 9,300 new private housing units could be generated from collective sale sites sold or awarded between 2016 and the middle of this month. The figure cited in the URA's third-quarter real estate market press statement on Friday is based on the land areas of the en bloc sale sites and allowable plot ratios under Master Plan 2014.
The 9,300 units will be part of a potential supply of about 16,700 units (including executive condo or EC units) that have not been granted planning approvals yet. The remaining 7,400 units will come from awarded Government Land Sales (GLS) sites, reserve-list sites triggered for sale but not awarded yet, and confirmed-list sites that have yet to be awarded.
The URA said: "A large part of this new supply of 16,700 units could be made available for sale in the next one to two years, and will be completed from 2021."
This figure is in addition to the 17,178 unsold, uncompleted units with planning approvals as at end-Q3 2017; this figure comprises 16,031 private homes and 1,147 EC units.
An analyst said that concern over the large supply is substantiated if it is assumed that our population continues to contract. However, as the economy restructures, there will be increased demand for overseas talent, especially if the local population is not growing fast enough. The influx of talent could help to offset the larger supply.
A veteran property consultant who declined to be named said the 16,700-unit supply from GLS and en bloc sites flagged by URA will in fact be replenishing supply in order to meet demand.
"The market situation now is that the number of unsold units in launched private residential projects (excluding ECs) stands at 2,223 as at the end of Q3 2017 - half the 4,698 units in Q3 2016.
"This is what is launched and available to buyers. If there are so many buyers running around, with only 2,000-odd units, it's going to be very difficult to meet demand," he said.
The 2,223 units are part of the 16,031 unsold, uncompleted private homes in projects with planning approvals as at end-Q3; this is higher than the 15,085 units in the previous quarter, but is considered low compared to the approximately 31,000 units in Q3 2013, the recent peak for the URA private-home price index. The 16,031 figure is also well below the 43,000-plus figure of Q2 2008, during the global financial crisis.
In the first nine months of this year, developers sold 8,702 private homes and 3,565 EC units, based on URA's data released on Friday.
The potential supply of 16,700 units (including ECs) from GLS and en bloc sites highlighted by URA is still subject to planning approvals.
The en bloc process has a lot more hurdles than buying a GLS site; for instance, you may require approval by the Strata Titles Board or High Court. And the developer may be required to obtain more approvals from government agencies for its proposed redevelopment of a collective sale site, which may drag the launch date a little. So the impact from this supply may not be so immediate.
The URA, referring to its estimated potential supply of 9,300 new private homes, said: "For each site, the number of units proposed by the developer will be subject to detailed evaluation to determine if it can be supported."
Industry players said the authorities are concerned, for example, about the impact of a new development on traffic. An analyst who declined to be named said: "For instance, if a development that goes for collective sale now has, say, 200 units, and the developer that buys the site is thinking of putting, say, 600 units on the site, the car population from among the residents is highly likely to go up."
Adapted from: The Business Times, 28 October 2017