Unsold number of private properties hit 3-year high as prices continue to rise

The number of unsold private residential units reached a three-year high in the second quarter, based on data released by the Urban Redevelopment Authority (URA) on Friday (July 27).

Property analysts said that while there is a risk of oversupply, the situation is not alarming over the longer term as developers are expected to reduce supply following the recent cooling measures.

This is despite the URA noting that a “significant number” of new housing units are set to come onto the market due to the large number of properties sold en-bloc and the redevelopment of these plots over the past two years.

As at the end of June, there was a total supply of 45,003 uncompleted private residential units with planning approvals, compared with 40,330 in the first three months of the year.

Of these, 26,943 units remained unsold as at the end of June — up from 23,514 units in the previous quarter, and the highest since the first quarter of 2015 when there were 27,061 homes unsold.

Ms Tricia Song, head of research for Singapore at real estate services firm Colliers International, said: “We believe developers will likely pace out the launches of new projects and thereby reduce the risk of an oversupply of units in the market.”

Assuming the below-average run-rate of 700 to 1,000 developer sales a month, the 26,943 unsold units can be absorbed in two to three years, Ms Song said.

Even if those units with no planning approvals were included to bring the number to 37,263, that will take at most 4.4 years to absorb, which “is not excessive in our opinion”, she added, because developers hold a land bank (amount of land set aside for projects) that can last them three to four years.

“The Government has come in very early this round to tamper the market,” Ms Song noted.


Ms Christine Sun, head of research and consultancy at real estate agency OrangeTee & Tie, said that there are three factors that may mitigate a supply glut in the long term.

First is a shift in demand for larger units in the coming months, as she expects there to be more owner-occupiers than investors buying homes since they are less affected by the cooling measures.

Second, the collective sales market is slowing, which may contribute to a drop in housing supply.

Third, home demand should continue to be healthy as Singapore’s economy is still strong.

Agreeing, Mr Alan Cheong, senior director of research at property firm Savills, predicts that supply numbers “will trend down” as the 25 per cent Additional Buyers’ Stamp Duty (ABSD) and the 5 per cent non-remittable ABSD levied on developers “will add friction to the collective sales market”.

“On the demand side, the higher ABSD on buyers of second or more properties will also force developers to re-orientate their priorities to that of substantially clearing off their inventory,” he said.


Mr Cheong said that supply numbers may go up further only for a while more, because there are still collective sales hanging in the balance. “Once these are cleared and the supply enters the URA statistics, from then on, it will begin to fall,” he added.

Ms Christine Li, senior director of research at real-estate services firm Cushman & Wakefield, attributed the three-year high of unsold numbers of private housing units to the likelihood that developers are spacing out their launches, to avoid direct competitions from nearby projects due to the increased supply.

“Should the pace of en-bloc sales slow down in the coming quarters (due to the revised ABSD rates), the supply risk could be mitigated if demand picks up later, after the dust settles, and the economic growth continues to gather pace,” she added.


Giving another reason for private home-buyers not biting as much, the analysts said that the reduced affordability of private properties might have pushed owners who profited from recent en-bloc sales to buy public housing units instead.

This is plausible judging from the latest statistics from the Housing and Development Board (HDB), also released on Friday, which showed that the number of resale flat transactions jumped by 33 per cent. A total of 5,941 resale flats exchanged hands April to June, compared with 4,458 from January to March.

However, Ms Li said that the extent “could be rather marginal”, as private home-owners may still want to reside in a private estate due to the added amenities and lifestyle.


The rising prices of private residential units are not abating, going up by 3.4 per cent in the second quarter and continuing the previous quarter’s 3.9 per cent gain. This puts private home prices at the highest in four years.

Despite the high prices, URA’s figures also showed that developers sold almost 50 per cent more units, as buyers snapped up a total of 2,366 units between April and June, compared with 1,581 units from January to March.

Mr Desmond Sim, head of research for Singapore and South-east Asia at real estate services firm CBRE, foresees that the price index should “continue to display some growth till year end”, noting how prices of some newly launched projects are establishing “new benchmarks on the back of higher land costs”.

While that may so, PropNex Realty’s chief executive officer Ismail Gafoor warned that the “repercussions of the sudden cooling measures are expected to be felt in the coming quarters”.

“Buyers and investors might start to adopt a ‘wait and see’ attitude to gauge the effects of the measures,” Mr Ismail said.

“At recent launches, developers are also adjusting their development prices sensitively, with some offering discounts of up to 10 per cent, factoring in the ABSD increase that their buyers will incur. These will indirectly correlate to the price index movements in the coming quarters.”

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