Despite the Monetary Authority of Singapore’s (MAS) warning that private home supply may significantly rise over the next few years on the back of the surge in en bloc deals, Maybank Kim Eng believes it is “far too early” to be worried of a potential oversupply, reported Today Online.
This comes as the redeveloped properties from the en bloc sales would not be entering the market until 2020 to 2021, said Maybank Kim Eng analyst Derrick Heng in a report.
He noted that the average net supply would still not be excessive – at a little more than 11,000 units per year – even after taking into account the completion of such projects in three to four years.
In fact, the figure is way lower compared to the 19,500 units added annually from 2014 to 2016 as well as the five-year average absorption rate of 13,200 units.
“As long as home buying sentiment is maintained, we believe fresh inventory from the Government Land Sales (GLS) and en bloc deals done can comfortably be absorbed,” said the report.
The availability of new inventory for sale may also be affected by delays or disputes in the collective sales deal.
“This should keep the supply of unsold units in the market in check,” it added.
In agreeing, JLL national director of research and consultancy Ong Teck Hui noted that instead of worrying of an oversupply, the potential supply coming from the en bloc sale sites sold since mid-2016 should be considered as “timely” in adding to the recent GLS programmes’ “low” supply.
Ong revealed that the unsold inventory of new private homes fell by about 50 percent over the last four years – from over 32,000 units in Q3 2013 to 17,421 units as at Q3 2017.
“Developer sales volume could end the year at around the 10,500 to 11,000-unit level. If this buying momentum is sustained into 2018 and 2019, the unsold stock of 17,421 units would be depleted in less than two years,” he said.
This article was edited by Keshia Faculin.