Monday, October 27, 2008

URA Figures Ease Fears Of Housing Glut

Source : The Straits Times, Oct 25, 2008

Only 8,538 new private homes to be ready in 2010 - down from 11,788 in 2nd-quarter forecast

WORRIES about an oversupply of private homes are receding after the release of government figures that, for the first time, offer a detailed geographical breakdown of new homes in the pipeline.

It was the second straight quarter that the Urban Redevelopment Authority (URA) had lowered its forecast of home completions for 2010 and beyond.

The URA now expects only 8,538 homes to be ready in 2010 - down substantially from the 11,788 homes that it had forecast in the second quarter. Earlier, in the first quarter, it had forecast a whopping 17,545 homes.

In all, its forecast for the number of uncompleted homes in the pipeline dropped to 67,463 units in the third quarter, from 71,643 units in the second and 74,208 units in the first.

The lower supply figures would ease downward pressure on rentals, said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

Earlier, concerns were building as the supply numbers remained high even as the market slowed considerably this year and the financial turmoil raged on.

The URA now expects to see 16,145 private homes completed in 2011, down from 19,559 in the second quarter.

And home completions in 2012 and beyond 2012 are now at 16,742 units and 13,565 units respectively, compared with 14,179 and 10,826 previously.

Savills Singapore's director of business development and marketing, Mr Ku Swee Yong, said the lower URA completion figures are a result of developers deferring projects due to the slow take-up rates of new homes and high construction costs.

The delays in completion dates were expected, given insufficient construction resources, completion delays in collective sales and delayed launches, he said.

Since the market turned quiet at the start of the year, many developers have delayed launches.

In the first nine months of this year, developers launched 5,401 private homes for sale - just 44 per cent of the total launches in the same period last year, said Knight Frank.

In the same period, they sold a total of 3,845 private homes, which is only 29 per cent of the sale figures in the corresponding period last year.

Yesterday, for the first time, URA released more detailed pipeline supply data, breaking down supply by the three main regions and expected year of completion. The Straits Times proposed such a breakdown in a commentary last month.

The URA made this information available separately on its website.

The data showed that there is a pipeline supply of 23,008 private homes in the core central region which includes districts 9, 10 and 11, down from 24,582 in the second quarter.

Supply in city-fringe areas such as Bukit Timah, Newton and Toa Payoh, rose to 19,736, from 19,053 in the second quarter.

As for the suburban areas, the pipeline supply fell slightly to 23,678 units, from 23,934 in the previous quarter.

According to the new URA data, just 733 homes in the core central region would be ready this year, down from the 2,363 expected in the second quarter.

While the drop next year is not dramatic, considerably fewer high-end homes will come to market from 2010 onwards.

Coming up

Number of private homes expected to be completed:

# In 2008: 2,440
# In 2009: 10,033
# In 2010: 8,538
# In 2011: 16,145
# In 2012: 16,742
# After 2012: 13,565
# Total 67,463


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