Too soon to say property market has recovered: Redas chief

HDB flats around Bukit Panjang as seen from Senja Road on May 29, 2017.
HDB flats around Bukit Panjang as seen from Senja Road on May 29, 2017. ST PHOTO: MARK CHEONG

SINGAPORE - While there are signs that hint that Singapore's property market is trending up, it is still too soon to indicate that the market has finally turned positive and recovery has kicked in, Mr Augustine Tan, president of the Real Estate Developers' Association (Redas), said on Friday (July 7).

Mr Tan said the Government's tweaking of cooling measures, active participation by developers in recent Government Land Sales (GLS) tenders, with some sites sold at record prices, and some successful property launches have stoked optimistic sentiment in the first half of this year.

But he said weak macroeconomic fundamentals, anaemic global growth, geopolitical risks and rising United States interest rates were cause for concern.

"Our concern is if the prevailing 'bullish' appetite for residential land persists amid pending rising interest rate and weak employment prospects, demand will weaken over time and hasten the compounding effects of increasing supply and high vacancy," he told the audience at a seminar organised by Redas.

Singapore's weaker labour market, coupled with more modest wage growth and higher inflation, is expected to dampen sentiments going forward, he said.

He added that the inventory of private residential units will remain high, with a supply overhang of about 37,000 uncompleted units as of the first quarter of this year, of which nearly 16,000 units or 43 per cent are still unsold.

"At the current new private residential transaction volume of approximately 8,000 units in 2016, it will take around two years to absorb the existing stock, barring unforeseen circumstances. Furthermore, the Government has released a potential supply of 8,125 private residential units for the second half of 2017 through its GLS programme. Quite a number of the sites offered are in attractive locations," he added.

He also noted that the increasing interest in collective sales, with about 25 potential sites comprising some 5,300 units, will potentially boost supply further.