Supply of private homes reined in amid fears of glut

The area of Kampong Bugis (foreground) as seen on June 6, 2019. The site will be released for sale under the reserve list to a master developer under the government land sales programme for the second half of 2019.
The area of Kampong Bugis (foreground) as seen on June 6, 2019. The site will be released for sale under the reserve list to a master developer under the government land sales programme for the second half of 2019.ST PHOTO: MARK CHEONG

Only 1,715 units, including ECs, on confirmed list for second half of 2019 in muted market

Amid a slowdown in the property market and a souring business outlook, the Government is reining in the supply of private housing units being released in the second half of 2019.

The aim is to avoid worsening a supply glut with a squeeze on confirmed sites under the Government Land Sales (GLS) programme, which are put up for sale on pre-determined dates.

Only 1,715 housing units - including 480 executive condo (EC) units - will be up for grabs on the five confirmed list sites in the second half of the year. This is 15.3 per cent less than the 2,025 such units offered in the first six months of 2019.

For the year as a whole, only 2,875 private residential units - excluding ECs - would have been released into the market through the confirmed list. According to consultancy JLL, this is the lowest quantum since 2014, when the total debt servicing ratio (TDSR) was imposed to ensure that property buyers do not overextend themselves.

In the past five years, the supply of private homes under the confirmed list has ranged from 3,095 units to 4,355 units, JLL added.

"The Singapore Government has maintained a cautious approach to its land sales programme... in view of the ample supply of housing units in the pipeline and the relatively muted residential property market," said Ms Tricia Song, Colliers International's Singapore head of research.

Including the reserve list, which can be triggered for sale only if there is sufficient market interest, a total of 6,430 potential units are on offer.

 
 

There are eight reserve list plots in the upcoming GLS programme that can yield 4,715 units, 92,000 sq m gross floor area of commercial space and 1,100 hotel rooms, the Ministry of National Development (MND) said yesterday.

Analysts also noted that the upcoming slate allows more flexibility in land use through white sites, where a range of uses is allowed, such as at the proposed 9.2ha site in Kampong Bugis.

Since the property cooling measures were introduced in July last year, demand has continued to fall, with overall transaction volumes declining for three straight quarters, while developers' demand for land also moderated, MND said. Further, there is a large supply of 44,000 private housing units in the pipeline, while around 24,000 existing private housing units remain vacant.

Mr Ong Teck Hui, JLL senior director for research and consultancy, said the reduction in confirmed list supply "reflects concerns over the substantial supply of unsold units in the pipeline that resulted from the robust collective sales in 2017 and the first half of 2018 and... is appropriate given the increasingly bearish economic and business outlook".

Still, the Irwell Bank Road site in the confirmed list, which can generate 445 units, stands out as it is in the prime district and near upmarket developments including New Futura, analysts said.

One notable change in the GLS programme involves a 4.1ha site in Canberra Drive offered in the first half of 2019, which has been split into two lots for sale in the upcoming slate. The parcels of 220 and 455 units are now more palatable to developers and can offer entry-level private housing, Mr Ong said.

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A version of this article appeared in the print edition of The Straits Times on June 07, 2019, with the headline 'Supply of private homes reined in amid fears of glut'. Print Edition | Subscribe