More Than 31,000 Private Homes To Be Completed In 2009 and 2010

Source: The Straits Times, 15 June 2007

A flood of more than 31,000 completed private homes will hit the market between 2009 and 2010 - more than six times the number expected to be completed this year.

The dramatic increase in the amount of new property is likely to ease an escalating supply squeeze - and curb runaway rent increases - but relief is still a couple of years away.

Until 2009, the supply of new completed homes will be only comparatively modest, according to new government figures released yesterday.

Just under 11,000 homes are expected to be finished between now and the end of 2008 - slightly less than the 11,147 new homes developers sold last year.

This means the supply of completed properties will continue to lag behind demand until 2009, said property consultants.

They added that rents, already rising because of an influx of expatriates and the demolition of collective sale properties, will surge further.

‘Rentals and prices will probably strengthen until at least the end of the year, especially in the central region,’ said Dr Chua Yang Liang, head of Singapore research at Jones Lang LaSalle.

Rising private home rents - which have doubled over the past year in some cases - are already driving tenants to the more affordable public housing market and are starting to push up Housing Board rents.

This has led property experts to dismiss concerns about an oversupply in 2009, even with the profusion of new completed homes then.

‘The supply that is coming up is not alarming; it is reassuring,’ said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

‘There’s going to be a tight supply until 2008, so the new supply in 2009 will help restore a certain balance, a new equilibrium.’

The new supply of completed homes should also help alleviate the spate of complaints from expatriates about recent rent increases, he added.

More than 70 per cent of these new homes will be in the central region, which includes Orchard, Marina, Bukit Timah, Queenstown, Bishan and Marine Parade.

‘This could help restore some of the confidence in Singapore’s competitiveness after all the talk about rising costs,’ added Mr Mak.

Dr Chua also said the active collective sales market will mean that displaced home owners will soak up most of any excess home supply in the market anyway.

But he admitted that the unusually large number of completed homes expected in 2009 may cause ‘adjustments in the market’.

‘The rate of increase in rents and prices may stabilise a bit before continuing to rise,’ he said, adding that they are unlikely to drop at all because ‘we are still in a growth cycle’.

‘We shouldn’t expect rents and prices to go down. It’s just a matter of a slower rate of increase,’ he said.

Another consultant, Mr Li Hiaw Ho of CB Richard Ellis Research,estimates that more than half of the new homes to be completed by 2010 could have already been sold.

‘With the government’s projection of a future population of 6.5 million, demand for new homes is expected to be taken up by newly-formed families, expatriates and foreign investors,’ he said.

The deluge of new completions expected in 2009 and 2010 will largely be a result of the massive wave of collective sales that have occurred over the past two years.

The large estate of Gillman Heights, for example, was sold en bloc recently with CapitaLand planning a development that will have double the number of existing units.

PRICE IMPACT

‘Rentals and prices will probably strengthen until at least the end of the year, especially in the central region.’

DR CHUA YANG LIANG, head of Singapore research at Jones Lang LaSalle

SUPPLY BALANCE

‘There’s going to be a tight supply until 2008, so the

new supply in 2009 will help restore a certain balance, a new equilibrium.’

MR NICHOLAS MAK, director of research and consultancy at Knight Frank