Redas: Increase in private residential prices not reflective of market conditions

By Bong Xin Ying
/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - Singapore developers are concerned with the current market situation of “high supply and subdued demand”, says Chia Ngiang Hong, president of the Real Estate Developers Association Singapore (Redas), at the association’s Mid-Autumn Festival Lunch today (Sept 13).
While the private residential property market has seen more activity in recent months, Chia highlights that the price increase of 1.5% in 2Q2019, “does not reflect the true state of the market”.
“New home sales remain lacklustre on the back of existing cooling measures, abundant unsold stock and worrying economy,” he states. “The general take-up rate is also at a slower pace as compared to the total number of units available for sale.”
Based on URA data, as at the end of 2Q2019, there was an estimated total supply of about 54,000 uncompleted private residential units in the pipeline with planning approvals. Among these, 35,500 units remained unsold.
With a potential supply of 7,100 units from the Government Land Sales (GLS) sites that were sold earlier this year and successful en bloc sites that have not been granted planning approval, he estimates that approximately 43,000 units will be available for sale in the near future.
In 1H2019, developers sold a total of 4,188 private residential units (excluding executive condominiums).
“Assuming the present rate of take-up continues, we will likely see a total sales volume of about 8,000 units for the whole of 2019,” he observes.
Based on these estimates and barring any unforeseen circumstances, he observes that it would take four to five years for the market to absorb the 43,000 units available for sale.
According to Chia, Redas has shared its concerns with the government and has been assured that the latter is monitoring the market and “will act appropriately at the right time when the situation warrants”.
In the meantime, he emphasizes that Redas’ partners and stakeholders are committed to nation-building for the long haul. “Real estate developers will have to look beyond short-term volatility and uncertainty, to prioritise and invest for long-term growth,” he says.
Minister for Manpower and Second Minister for Home Affairs Josephine Teo, who graced the lunch, states: “If you want a healthy property sector and if we want our property investments to bear fruit over the longer term [and] to hold their value, it’s really important that you are able to maintain vitality in a city in which the property investment is made. That is the only way you can hold the value of the investments.”
To this end, Teo remarks that the recent National Day Rally outlines long-term plans to keep Singapore’s economy competitive. “These are important ingredients that help to keep our city vibrant and filled with vitality,” she adds.
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