The supply of new Housing Board flats has been further reduced amid declining demand, as the resale market continues to cool for the fifth consecutive month.
About 1,900 flats, or 8 per cent, have been cut from an original supply of 24,300 units this year. This is in order to "respond appropriately" to shrinking demand, the authorities told The Straits Times late on Wednesday.
The reduction is in the bigger flats: three-roomers and larger. Instead of 18,600 units, as announced last December, there will be only 16,700 flats.
But this is still more than the estimated 15,000 new Singaporean family formations annually, said a Ministry of National Development (MND) spokesman.
In a written Parliament reply, National Development Minister Khaw Boon Wan said MND has "cleared the backlog of first-timer applicants". He was responding to Nee Soon GRC MP Lee Bee Wah on Tuesday, after she had asked for the number of upcoming flats for the next two years.
The number of two-room flats and studio apartments remains unchanged, at 5,000 and 700 units respectively, to cater to demand from low-income families, singles and the elderly.
An MND spokesman said the first-timer application rate had eased to an average of 1.7 applicants a flat last year, and ranged between 1.0 and 1.7 for the first half of this year.
SLP International research head Nicholas Mak said the lowered supply is still substantial.
"It's like you're on the expressway and you went from 130kmh to 110kmh - you're still speeding," he said. "It's better to decelerate slowly than to suddenly have a small supply and everyone reacting in shock."
The reduction, said Mr Khaw on Tuesday, is also in anticipation of more buyers returning to the resale market. Indeed, for the fifth consecutive month, resale prices dropped last month, a new low since April 2012, according to Singapore Real Estate Exchange flash figures yesterday. Overall prices slipped by 0.6 per cent last month from May, and 6.1 per cent from June last year.
Resale volume stayed relatively constant with 1,315 flats sold last month, compared with the 1,320 transacted units in May, and the 1,325 units resold in June last year.
R'ST Research director Ong Kah Seng said prices and demand are expected to stabilise by the second half of this year.
But ERA Realty key executive officer Eugene Lim is less optimistic: "Prices could continue to fall a bit further before stabilising as the measures continue to bite."
Resale flat prices have been increasingly attractive for photographer Ted Chen, 30, who was unsuccessful in three Build-To-Order (BTO) applications over two years. Of the declining applicant-to-BTO ratio, he said: "I wouldn't raise my hopes up, because it hasn't flatlined to a one-to-one ratio yet."