SINGAPORE (June 10): With some 24,000 unsold private residential units and another 44,000 in the pipeline, and a recession on the horizon, there are indications of the government being wary of an oversupply in the property market and moving to nip the problem in the bud.
In the half-yearly Government Land Sales (GLS) programme announced on June 6, there will be 13 sites available for the construction of 6,430 units, down slightly from 6,475 units made available in the GLS in 1H2019.
This total number for 2H2019 is for both the “confirmed list” and “reserve list”. The number of units under the confirmed list has been cut by 25% from 1H2019, from 1,640 units to 1,235 units. The total of 2,875 units in the confirmed list for 2019 is the lowest number made available since 2014.
The employment of the GLS, together with other administrative levers such as buyer’s stamp duty and the debt servicing ratio, enables the government to manage land supply and keep a tight grip on the property market. The latest instalment “reflects the state planners’ prudence towards the market”, says Desmond Sim, CBRE’s head of research, Southeast Asia.
“The reduction of the supply of private homes in the confirmed list is appropriate, given the increasingly bearish economic and business outlook,” says Ong Teck Hui, Jones Lang LaSalle’s senior director for research and consultancy.
URA notes that demand for private residences has continued to weaken. Between 4Q2018 and 1Q2019, new sales by developers were largely stable at 1,836 and 1,838 units, respectively. However, resale transaction volume fell from 1,971 units to 1,858 units. Developers’ demand for land has also moderated, according to URA.
Selling prices have declined as well, albeit not by much. In 1Q2019, Singapore private home prices fell for the second consecutive quarter. The URA price index slipped 0.7% q-o-q to 148.6 points, while luxury home values fell 2.9% q-o-q, the most since the quarter ended June 2009.
In a June 4 report, the Institute of Chartered Accountants in England and Wales (ICAEW) warns that Singapore is facing the sharpest slowdown among the Southeast Asian economies. The country’s GDP, which rose 3.1% in 2018, is likely to slow to just 1.9% this year.
“Renewed trade tensions between the US and China come at a time when export growth across the region is already facing a difficult external environment,” says Mark Billington, ICAEW regional director for Greater China and Southeast Asia.
With trade tensions continuing unabated, the export-driven economy of Singapore is seen to remain exposed. A recession in 2020 is possible, if external conditions continue to worsen, ICAEW adds.
In a May 30 interview with Bloomberg, national development minister Lawrence Wong says Singapore has stabilised the real estate sector with the most recent set of cooling measures imposed last July. “The property market last year, before the cooling measures were put in place, we saw prices rising very sharply,” says Wong. “There was a very real risk that prices would outpace fundamentals, and I think if that had happened, then eventually, it would lead to a destabilising correction, and I think everybody would be worse off.”
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