Apartment vacancy rates are almost at 10-year highs and could rise further to levels not seen since the Asian financial crisis. About 9.2 per cent of flats here were vacant in the second quarter, the highest since the 9.8 per cent rate at the end of 2005.
The main culprit is the record number of home completions: 19,941 private homes were completed last year. A further 42,606 private homes will be completed across this year and next, of which about 96 per cent are non-landed homes, according to SLP Research estimates.
The over-supply stems in part from government moves to cool the booming residential market.
Housing demand has not been growing in tandem with supply, which means rents will continue to be under pressure. So what can be done?
The Government has made fewer development sites available but units at plots sold now come on stream only four to five years down the road.
On the demand side, immigration is key to reviving numbers but it is widely unpopular.
The Government has been keeping a tight lid on the numbers of people coming into Singapore, a policy that is also behind the higher vacancy rates.
The slowing global economy is not helping either.
Many agents are dealing with lease terminations for expats in sectors faring poorly, such as banking and oil and gas. A recent move by the Ministry of Manpower will again hit demand. It announced late last month that it will raise the minimum salary bar for foreigners working here to apply for visas for family members. But market observers note that the Government has been showing signs of softening its stance, or at least broaching the issue.
Prime Minister Lee Hsien Loong told a dialogue last month that it makes economic sense to take in foreign labour and immigrants, though this may be hard to accept emotionally. "We need to make the best possible decision for Singaporeans," he said.
Housing is impacted by decisions in this area and if demand does not grow, the outlook is bleak. SLP Research expects the non-landed vacancy rate to hit 10 per cent by the end of this year, with the woes of landlords and developers to continue.