Despite the 1.5% rise in private home prices in Q2, developers have expressed concern that this may not be a true reflection of the actual state of the market.
Cooling measures a continued cause for concern for developers
Home sales have however dipped and developers are concerned that the current state of high-supply and low-demand may tilt the scale more drastically in the short-term future. The take-up rate for private properties have been a little slow, and perhaps one of the developers’ most urgent concern is directed at the current property cooling measures.
Another concern is the rise in the number of available units in the market. By the end of Q2, an estimated 54,000 uncompleted private residential units in the pipeline, 35,500 of which remain unsold. 43,000 may be made available for sale soon, 7,100 of which are under the government land sales programme, pending approval.
Estimated 4 to 5 years required to clear stock of private homes
Of this 43,000, developers are estimating a 4-5 year period to sell them all. The overall slowdown of the global economy has also dampened sentiments. Demand for new homes in 2018 slowed to 8,800 units, down from 10,566 units in 2017. The baseline for the demand for new homes is 7,500; this year, the sales of new units is likely to hit only the 8,500-unit mark.
There is a concern that dependency on foreign funds to prop up the luxury property market may eventually affect the market especially as Singapore’s population growth has shrunk to less than 1%.