Home supply to spike in next few years

[daringd]

Straits Times: Thu, Mar 03

A HEFTY supply of new homes coming on to the market over the next few years could push prices and rents down, warn analysts.

The risky years look to be 2013 and 2014 when a record number of homes are expected to be completed, many on the plots of state land that have been sold in recent months.

There are expected to be 17,111 new homes completed in 2013 and 17,421 in 2014, according to a recent analysis of Urban Redevelopment Authority (URA) data. These include homes under construction or already with planning approvals.

These figures are considerably more than the record of 14,000 or so private apartments completed in 1998, said DTZ's head of South-east Asia research, Ms Chua Chor Hoon. She noted that the figures go even higher if projects that get planning permission in the near future - such as sites on the confirmed list of the government sales programme - are included.

Ms Chua's forecasts then suggest that 21,680 homes could be completed in 2014 and about 22,520 in 2015, with the total number of homes estimated to be completed from now until 2015 surging to about 78,300.

Add in new Housing Board flats and the market could have a serious supply spike in two or three years, she added.

'Although there is increasing demand from singles moving out to live on their own, and economic growth would mean more foreign workers needing accommodation, the supply will still be substantial.

'The demand-supply imbalance is expected to lead to prices and rentals coming under pressure, especially if interest rates are higher then,' she said.

The bumper projections for 2013 and 2014 are even more striking given that an average of only 8,563 homes - including executive condos - have received Temporary Occupation Permits a year over the past 10 years, Savills added.

A report by Nomura analyst Sai Min Chow last month also noted a possible 'supply tsunami' next year, suggesting that 15,457 non-landed private homes are scheduled for completion next year, double official estimates.

There are 65,699 private residential units expected to be completed by 2015, with 32,776 unsold as of the end of last year, said the URA.

Nomura's Mr Sai pinpointed the prime luxury segment in the city centre region as being the most susceptible to price falls next year.

He noted that about 47 per cent of the homes that will be completed this year are in that segment, which has already seen signs of rental weakness.

But experts noted that developers can adjust their completion dates in line with market conditions. The Government can also reduce the risk of oversupply by slowing land releases.

And it is not out of the question that the market will be able to absorb the thousands of new homes given the fast-growing economy and population.

Experts also noted that the URA numbers are only estimates. Accurate figures will emerge closer to the year itself as developers assess the market and firm up their plans.

Cushman & Wakefield's senior manager of Asia-Pacific research, Mr Ong Kah Seng, added that it is not certain that prices will soften in the next few years even with the surge of completions.

'If home-buying interest in that horizon can be boosted by an increase in an economically active population confident in financing private homes, the possibility of a supply overhang can be mitigated,' he said.

esthert@sph.com.sg


Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

[Dennis Ng]

Straits Times: Thu, Mar 03

A HEFTY supply of new homes coming on to the market over the next few years could push prices and rents down, warn analysts.

There are expected to be 17,111 new homes completed in 2013 and 17,421 in 2014, according to a recent analysis of Urban Redevelopment Authority (URA) data. These include homes under construction or already with planning approvals.

These figures are considerably more than the record of 14,000 or so private apartments completed in 1998, said DTZ's head of South-east Asia research, Ms Chua Chor Hoon. She noted that the figures go even higher if projects that get planning permission in the near future - such as sites on the confirmed list of the government sales programme - are included.

Ms Chua's forecasts then suggest that 21,680 homes could be completed in 2014 and about 22,520 in 2015, with the total number of homes estimated to be completed from now until 2015 surging to about 78,300.

Add in new Housing Board flats and the market could have a serious supply spike in two or three years, she added..

When more and more people think and say that:"if I don't buy now, price would be even higher in future." Or "Property prices in Singapore can only go up..." You know that the Risks are rising not falling.

I personally will NOT buy any condo for investment at the current moment. I bought Icon last year and prices already about 13% higher...I may not sell this property as I'm buying for the Long Term Development Potential and re-making of Tanjong Pagar.

[lop]

Some property investors seem "blissfully ignorant" of the massive supply that will hit the property market.

The following report is from CNA:

SINGAPORE: National Development Minister Khaw Boon Wan on Thursday sounded the alert on the spike in property prices in his latest blog posting.

He said things can go very wrong suddenly and gave three reasons.

Firstly, 35,000 private homes have already been sold - though still in construction - with payments in various stages of completion.

And there are 45,000 units in the pipeline, waiting to be built and sold.

Secondly, URA on Thursday announced its Government Land Sale Programme for the second half of the year which will inject another 8,000 private residential units into the market.

Together with committed investments, some 53,000 units will be looking for buyers over the next few years.

Lastly, Mr Khaw said the external situation is not exactly bullish.

The European sovereign debt crisis will take a long time to clear.

The Middle East crisis can still go ugly.

If that leads to a spike in oil prices and halts the fragile global economic recovery, the impact on Asia and Singapore will be direct and immediate.

Moreover, foreign buyers of these properties 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 who come here to live or work.

In the event of any external shock, both foreign demand and rental demand can fall quite quickly.

Mr Khaw said the impact can be serious if the drop in demand happens at a time when there is a substantial increase in supply.

Further, low interest rates will not remain so forever. Cost of borrowing and repayment must go up and households must factor this in.

Mr Khaw said he's not the only one worried.

He cited a property analyst who recently said some property investors seem either "blissfully ignorant" of the massive supply that will hit the market from 2013.

Mr Khaw said market correction or any crash is not a given.

If all goes well, the economy will continue to grow and those who bought properties here will enjoy good returns when their units are completed in the next few years.

But no one is immune to mishaps.

With so much uncertainties, the Minister advises investors and upgraders to bear these considerations in mind when they go to show rooms and contemplate if they should sign up.

-CNA/ck