Despite the first uptick in second-quarter private home prices since last July's cooling measures, lacklustre new home sales remain a key concern for developers, said Mr Chia Ngiang Hong, president of the Real Estate Developers' Association of Singapore (Redas), yesterday.
He added that although prices of private residential properties rose by 1.5 per cent in the second quarter, that "does not reflect the true state of the market".
"As developers, we are very concerned with the present challenging market situation of high supply and subdued demand," he said at the Redas Mid-Autumn Festival lunch yesterday.
"New home sales remain lacklustre on the back of existing cooling measures, abundant unsold stock and a worrying economy. The general take-up rate is also at a slower pace compared with the total number of units available for sale."
Another dampener is the challenging geopolitical and economic environment and heightened risks arising from United States-China trade tensions.
Based on Urban Redevelopment Authority data, as of the end of the second quarter, there was an estimated total supply of 54,000 uncompleted private residential units in the pipeline with planning approvals. Of this number, 35,500 units remained unsold.
Adding this number to a potential supply of 7,100 units from Government Land Sales sites and successful collective sale sites sold over the year that have yet to be given planning approval, 43,000 units are estimated to be available for sale in the near future, said Mr Chia.
Estimated number of uncompleted private residential units in the pipeline with planning approvals, as of the end of the second quarter.
Number of such units that remained unsold.
In the first half of this year, developers sold 4,188 private homes, excluding executive condominiums.
Said Mr Chia: "Assuming the present rate of take-up continues, we will see a total sales volume of about 8,000-plus units for the whole of 2019. Based on this take-up rate and barring any unforeseen circumstances, we would require four to five years for the market to absorb the estimated 43,000 units available for sale."
Sentiment has been hit by the global economic slowdown brought on by trade tensions and weaker euro zone economic growth.
According to a study by List Sotheby's International Realty (List SIR), demand for new homes last year slowed to 8,800 units from the 10,566 units in 2017. With the economy set to slow down further in the second half of this year, this will bring the whole year's new home sales to around 8,500 units, slightly higher than the fundamental demand of 7,500 units.
"As Singapore's population growth is now less than 1 per cent, it has to depend on foreign funds to invest in our real estate, especially at the higher end of the market," said Ms Han Huan Mei, List SIR's research director.
Singapore hotels could, however, turn in a healthy performance this year, given strong bookings in July and last month, and more conventions and exhibitions to be staged here in the last quarter.
Real estate investment deals also continue to be relatively healthy. Occupancy for office space has remained steady on the back of limited near-term supply, and growing office demand and rental are expected to stay relatively healthy.
The retail market, in contrast, is set to remain challenging. With continuing competition from e-commerce, malls are venturing into experiential retail concepts and prioritising digital marketing efforts to attract shoppers, Mr Chia said.