Government cuts supply of land for private homes as demand slows

Government cuts supply of land for private homes as demand slows

Singapore condo
File photo of a private condominium under construction in Singapore. (Photo: AFP/Roslan Rahman)

SINGAPORE: As the demand for private housing slows, the supply of land for such homes has been reduced, the Ministry of National Development (MND) said on Thursday (Dec 6).

Fourteen land sites, comprising five confirmed sites and nine on the reserve list, were released for sale on Thursday under the Government Land Sales (GLS) programme for the first half of 2019.

The sites are expected to yield 6,475 private homes, down from the previous GLS programme for the second half of 2018, which saw 15 sites released with an expected supply of 8,040 private homes. 

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After property cooling measures were introduced in July, buyers' demand for private homes has slowed and developers' demand for land has also declined, MND said.

At the same time, the supply of private homes in the pipeline has grown significantly to 45,000 units, the ministry said.

About 31,000 units from GLS and en-bloc sale sites with planning approval remain unsold, and there are an additional 14,000 units from sites pending planning approval. Another 28,000 existing units are currently vacant.

“Given these factors, the Government has decided to moderate the total supply of private residential units for the 1H2019 GLS programme. Together with the supply in the pipeline, this will sufficiently cater to the housing needs of our population,” MND said.

A WISE DECISION: ANALYST

Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, felt that the move was a "wise decision" as the demand for private housing may not keep up with launches in the coming months.

"While demand for new residential homes is expected to recover moderately next year to between 10,000 and 12,000 units, possibly due to a wearing-off effect of the cooling measures and an anticipated positive economic growth for next year, about 17,000 to 19,000 new homes are expected to be launched in 2019," Ms Sun said.

She expects the balance unsold units to spill over to subsequent years and gradually absorbed.

"Developers are also likely to take a more measured approach in future land bidding exercises in light of the on-stream supply and new guidelines to raise the minimum average unit size for non-landed housing developments," she added.

The trimming of the land supply is also an indication that the Government is seeking to "ensure that the property market remains sustainable in an environment of heightened uncertainty, global trade tensions, and looming interest rate hikes", said Ms Tricia Song, head of research for Singapore at Colliers International.

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SOLE EC SITE LIKELY TO DRAW KEEN INTEREST

The 14 sites are also expected to yield 86,000 sq m gross floor area of commercial space and 1,115 hotel rooms.

The five confirmed sites released are private residential sites, including an executive condominium site at Canberra Link. The other four sites are located at Clementi Avenue 1, one-north Gateway, Tan Quee Lan Street in Bugis and Bernam Street in Tanjong Pagar.

According to Ms Song, the Tan Quee Lan Street, Bernam Street, and Canberra Link sites "should garner a healthy level of interest from developers".

She noted that Bernam Street could expect a top bid of S$400 million or S$1,700 psf per plot ratio.

As for the sole EC site on the confirmed list, it "should draw keen competition from developers, and help to rebuild the stock of EC supply in the market", according to Ms Tay Huey Ying, head of research and consultancy at JLL Singapore.

"To some extent, this should provide some relief to the sandwiched class of potential home purchasers.

"It is a good approach for the Government to continue to ensure a steady stream of land supply for private homes to prevent a repeat of the situation in 2017/1H2018 when developers’ depleting landbank led to the overheated land market accompanied by runaway land prices," Ms Tay added.

On EC supply, OrangeTee's Ms Sun felt that there has been increasing demand for them in recent years but the allocated number of units dipped from 1,210 units in the last GLS to to 910 units in the current GLS. 

"The reduced supply may further exacerbate the current price growth of new ECs," she said.

RESERVE SITES

The nine sites on the reserve list comprise six private residential sites, including an EC site at Fernvale Lane in Sengkang, a hotel site at Sims Avenue and two "white" sites, which are for mixed-use developments, at Marina View and Woodlands Avenue 2.

Colliers' Ms Song said that the site at Sims Avenue was unexpected but will complement the Government’s plan to rejuvenate the area and transform Paya Lebar into a regional commercial hub.

The mixed-use site in Woodlands is expected to help sustain the development of Woodlands Regional Centre as a major commercial node outside the city, MND said, adding that this will help bring jobs closer to homes.

The other private residential sites are at Bartley Road, Canberra Drive, Dairy Farm Walk, Dunman Road and Hillview Rise.

Source: CNA/cy(aj)

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