Significantly more housing units to be completed in 2014

SINGAPORE: 26,800 Housing and Development Board (HDB) flats and 22,400 non—landed private housing units are projected to be completed in 2014.

The numbers are significantly higher than those projected for this year —— 11,300 HDB flats and 12,500 non—landed private housing units are expected to be completed in 2012.

The National Development Ministry revealed these figures in a written response to questions posed by Pasir Ris—Punggol Group Representation Constitutency (GRC) Member of Parliament (MP) Gan Thiam Poh in Parliament on Monday.

Speaking in Parliament, National Development Minister Khaw Boon Wan said there is a significant supply of housing — both public and private — that will come onto the market over the next two years.

He said HDB has ramped up its Build—to—Order (BTO) supply significantly, and will keep up the pace of new flat supply into 2013.

He said this is to provide more options to suit individual housing needs and budgets.

Holland—Bukit Timah GRC MP Liang Eng Hwa had also asked if there are enough flats to meet unanticipated demand, such as those from singles.

He asked: "We may not always get the demand and supply right, so is HDB building some surplus to meet those unanticipated demand?"

Mr Khaw said the ministry is looking into the matter.

He answered: "We’re still mulling over it. (It is) very hard to put a figure on how much should we cater for singles."

Mr Khaw added that strong demand for residential property in Singapore is likely to persist as interest rates stay low.

While residential property prices may be stabilising, Mr Khaw said, Singapore is not yet "out of the woods".

The Resale Price Index has seen an uptick in the third quarter this year, with a two per cent growth from the second quarter of 2012 based on flash estimates.

"With the recent announcements of further monetary expansion in both US and the eurozone, the current low interest rate environment is likely to persist," said Mr Khaw.

"This will continue to contribute to the strong demand for residential property, which could cause prices to rise beyond sustainable levels."

He added the recently—announced new curbs on loan tenures are to encourage greater financial prudence among property purchasers in both the public and private housing markets.

The new curb is also a calibrated step to prevent excessive speculation.

According to analysts, the increased number of HDB flats to be completed in 2014 does not come as a surprise, as the government has been ramping up HDB flat supply in the past years.

Analysts say most of the flats should have been taken up by then, as typically about 70 per cent of units have been booked. Remaining units are also sold under the Sales of Balance Flats programme.

"Also, the BTO is a scalable programme; the government can always scale down the number of units that’s being launched once the needs of the home buyers have been met," added Mr Eugene Lim, key executive officer of ERA Realty.

The higher number of HDB units is not expected to have a significant impact on the resale market, if the flats are sold after the minimum occupation of five years in 2019.

Mr Lim said: "It is a bit far ahead to predict the impact on the resale market but I would suspect not all these flats’ owners will be selling their flats at the same time. Therefore the impact on the resale market prices will not be significant."

But it could be a different story for the private housing market.

According to Mr Lim, an oversupply is possible, and investors renting out units could be affected.

"We are already reducing foreign manpower and if this were to continue in the years to come, then we’ll find that in the year 2014, there may not be as much foreign manpower to take up the rental units," said Mr Lim.

"And when you have so many new units being completed in the market, then we might have a slight oversupply situation and that would lead to reduced rentals."

The National Development Ministry says about 39,600 units of private homes from projects in the pipeline remain unsold as of June this year.

— CNA/xq