Government holds housing land sales steady amid supply-demand gap

The government is holding land supply for private homes steady for the first half of 2020, which should keep the residential market stable amid a big supply of unsold units.

It said on Tuesday that it will keep the supply of private housing units on the confirmed list for the H12020 government land sales (GLS) programme broadly similar to that for H22019.

The Ministry of National Development (MND) said: “The government will continue to monitor the property market and adjust the supply for future GLS programmes as necessary.”

The confirmed list for H12020 has three new sites on it – two private residential sites (including an executive condominium or EC site), and a commercial and residential site.

Jointly, they can yield about 1,775 private residential units (including 600 EC units) and 22,000 sq m of gross floor area (GFA) of commercial space.

In the confirmed list in H22019, 1,715 private residential units were made available.

The MND said the supply of private housing units in the pipeline “remains high”, at around 39,000 units currently, although the number has fallen over the past few quarters.

This figure is made up of around 34,000 unsold units from GLS and en bloc sale sites with planning approval, and an additional 5,000 units from sites pending planning approval.

There was a supply of around 45,000 private housing units in the pipeline as at end-2018.

The ministry said: “While demand for private housing units increased in the past two quarters, overall transaction volume remained modest, relative to the period leading up to the introduction of the property marketing cooling measures in July 2018.”

Developers have been pleading for the government to heed the market.

Real Estate Developers’ Association of Singapore (Redas) president Chia Ngiang Hong said on Monday, at the association’s 60th anniversary dinner: “We hope the government will continue to watch the pulse of the market, with the aim of maintaining a stable and sustainable market in line with economic fundamentals.

“As developers, we are very concerned with the present challenging market situation of high supply and subdued demand.”

Christine Li, Cushman & Wakefield’s head of research for Singapore and South-east Asia, remarked that the authorities continue to be prudent and to err on the side of caution by pushing out a limited number of sites on the confirmed list, while leaving the bulk of supply on the reserve list.

Confirmed list sites are launched for sale according to schedule; sites on the reserve list are triggered for launch only when a developer’s indicated minimum price in its application is acceptable to the government.

Ms Li noted that only three sites have been released on the H12020 confirmed list – the lowest number in the last five years.

Excluding EC units, only around 1,175 private residential units will be released in this list, the lowest since H12016, when only 925 private residential units were released, she said.

Lee Sze Teck, director of research in Huttons Asia, said the government’s move to keep the supply of dwelling units similar to that in H22019 is good news, as it will keep the market stable.

Christine Sun, head of research and consultancy at OrangeTee & Tie, said the rate of increase in prices of private homes has slowed down substantially since the implementation of the cooling measures, and that the rise is now more in tandem with economic fundamentals.

“By maintaining the supply of new housing units for next year, the market may be better able to absorb the balance unsold units, thus further stabilising the private residential market,” she said.

The cumulative price increase for the first three quarters of this year was 2.1 per cent, much slower than the 7.9 per cent increase over the same period in 2018, she noted.

She said she expects prices to go up by between 2.4 per cent and 3 per cent for the whole of this year.

Consultants predict that 9,500 and 10,000 new homes could be sold for the whole of 2019, higher than the 8,795 new homes sold last year.

Ms Sun, referring to the 600 homes on the lone EC site among the three sites on the H12020 confirmed list, said the location of the site on Yishun Avenue 9 should pull in a healthy number of bidders.

The government has just raised the income ceiling for couples buying EC units from S$14,000 to S$16,000. This will likely expand the pool of eligible buyers and draw higher-income earners to the EC market, which go some way to absorb the upcoming supply of such homes, said Ms Sun.

Also on the confirmed list is the mixed commercial and residential Jalan Anak Bukit site, which can yield 865 residential units and 22,000 sq m of GFA of commercial space and an integrated bus interchange as well.

Consultants said this site in the Beauty World area will get developers excited.

Aside from the three confirmed list sites, there are eight reserve list sites on the H1 2020 GLS programme. All these sites can yield about 6,490 private residential units, 114,000 sq m of GFA of commercial space, and 1,070 hotel rooms.

The reserve list includes a white site at Woodlands Avenue 2 for a mixed-use development, carried over from the H22019 reserve list.

The MND said: “This will help to sustain the development momentum of Woodlands Regional Centre as a major commercial node outside the city, in line with the government’s objective of decentralising employment centres to bring job opportunities closer to homes.”

Another white site on the reserve list is in Marina View; there is also a hotel site in River Valley Road. Both these were carried over from the H22019 reserve list, and promise ample opportunities for developers to initiate additional supply of hotel rooms over and above the current pipeline supply, it said.

White sites are spaces that can be used as a combination of commercial, hotel, residential, sports and recreational spaces.