Wednesday, March 16, 2011

"Laylong" of private homes to come in 2 - 3 years' time...!?

According to the BT today, developers launched 1,710 private homes excluding executive condos (ECs) in February – 37% higher than in January and up to 45% from December – as they pursued a strategy of pushing out projects early to lock in sales in the aftermath of the Jan 13 property cooling measures.

The ratio of units sold (1,101) to units launched by developers in February was 64% - well below the 82 – 113% between January 2010 and January 2011 and the lowest since January 2009 (when the ratio was 53%) during the global financial crisis.

Looking ahead, there should be no dearth of new private homes launched for buyers to choose from, thanks to the government ramping up land sales since last year.

The concern developing in some circles now is whether this may create a glut later.

URA figures show that some 18,400 private homes (including EC) could potentially be launched by the end of this year from projects on sites sold under the Government Land Sales (GLS) Programme since 2010.

The 18,400-unit that could be ready for launch this year is more than the annual average take-up rate of 12,500 units (including ECs) over the past five years. Last year, developers sold 17,344 units including ECs while they launched a total of 18,234 units originating from both GLS and private-sector (e.g. collective sales) sites.

URA’s figures also show that the stock of private homes (including Ecs) launched but unsold has increased steadily from 3,620 units in September last year to 5,399 units in February 2011.

Credo Real Estate executive director Ong Teck Hui notes that the stock of unsold private homes excluding ECs (comprising units launched but unsold as well as units that have yet to be launched) has risen from 12,373 units in April last year to 19,033 units in February. Ïf this trend continues and take-up does not improve, it could signal oversupply building up.” Mr Ong said.

DTZ head of South-east Asia research Chua Chor Hoon predicts that developers would sell 9,000 – 12,000 private homes excluding ECs this year, down from the record 16,292 units in 2010.

She cites the more cautious buying mood following the Jan 13 property cooling measures, weaker stock market, Middle East revolts, catastrophe in Japan as well as uncertainty about whether there will be further cooling measures in Singapore. “Two to three years down the road when all this supply gets completed, we will see a spike in new home completions and that will create pressure on rents and housing prices,” she added.



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