Surge in supply may drag down home prices

Romesh NavaratnarajahSeptember 19, 2016

Singapore apartments nearby the river

Close to 25,000 private units are expected to enter the market in the next year, said a report. 

Private home prices here are expected to be dragged down by the large upcoming supply of 10,262 units in the second half of this year and 14,578 units in 2017, according to Singapore Business Review, citing a report from CIMB Research.

“We expect private home prices to continue declining and keep our projection for a mid-single digit dip in 2016,” said the bank.

In addition, around 45 percent of the incoming supply is located in the suburbs, and this could exert downward pressure on property prices.

“This will continue to drag on price outlook in these areas,” noted CIMB Research, adding that the situation could be exacerbated by rising vacancies and the declining pool of potential tenants.

To recap, sales of new private homes, excluding executive condominiums (ECs), plunged 56 percent to 473 units in August from 1,091 units in the previous month, revealed data from the Urban Redevelopment Authority (URA).

On a yearly basis, sales slid around seven percent from the 513 units recorded in August 2015.

Experts blamed the sales slump last month to the lack of new major launches due to the Hungry Ghost Festival, which is regarded as an inauspicious time to buy property.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

SS
Sep 19, 2016
This is a positive development as it moderates the housing price and ensures we are not over allocating our funds in one asset class. Some of these funds will eventually be used for entrepreneurship and drive greater innovation. This is one part of the economic transformation. We need to retain Singapore an attractive destination for expats and global MNCs and startups.
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