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SINGAPORE : Property analysts said the increased supply of HDB new flats will take some heat off mass property market. But they added that prices will keep the overall upward momentum.
The newly-launched build-to-order units are but a small portion of the 6,000 to be released in the first half of 2008. That is 25 percent more than the 4,800 units released under the scheme this year.
Together with the units expected from the planned release of seven other sites, next year is going to see a good surge in supply of mass market housing.
However, property consultants said the impact will be contained.
"If you look at the different segments, it's not going to have any impact on the high-end market or the mid-tier market. The new announcements is going to probably cause some upgraders to relook their plans on whether they should buy this new HDB flats or DBSS flats or executive condos as compared to that of mass market projects," said Nicholas Mak, Director of Consultancy and Research at Knight Frank.
Still, analysts said this will take the heat off the HDB resale market and slightly dampen demand in mass market condominiums for next year.
"Quite a few people are expecting the pick-up in mass market condos for next year. With this large increase in supply, this could divert some demand in the mass market," said Mak.
At the launch for HDB's November sales exercise, National Development Minister Mah Bow Tan said the cost of new flats will likely nudge upwards. That is because one of the factors in pricing them is the average price of resale flats.
However, he said the government won't jack up supply to keep prices down. He said: "We will be creating an oversupply situation downstream. The person who is a buyer today is also going to be a seller tomorrow.
"It may be an obvious thing to do today, to say let's build more flats because there's such high demand. But I think the lesson we have learnt over the years is that if you overbuild, you will create problems for the very people that you're trying to help."
Mr Mah added, however, that affordability will still be a key goal, with the income ceilings of applicants kept in mind.
Analysts also said plans for new executive condominiums will meet good market demand, especially those in mature estates such as Yishun and Jurong West.
"The demand for HDB flats is usually fairly volatile. For example in the mid 1990s, the number of applicants goes above 50,000 a year. But in recent years, over the last 5-7 years, that number can vary anywhere from 7,000 a year to as high as 14,000 a year. For next year, I don't think we'll be seeing much difference; it'll be around 10,000 to 12,000," said Mak. - CNA /ls
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