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Oversupply in the Market?

A recent press release by MND has sparked a great interest in the property market. Well the news is that the market has enough supply so the government will be reducing the supply by 15%. So it seems that the general public is not taking this in a positive manner and are there any surprises? No! My colleague Ghee Tat has taken an effort to piece together the puzzle to enlighten us on what is actually happening and what directions we should be taking.

But 24,000 empty apartments. Isn’t it scary? Won’t the rental market crash? Looks like any property owner and investors’ greatest nightmare!

Well, let’s look at the historical numbers to have a better understanding of what is happening.


Let’s take note of the rapid improvement in Vacancy Rate, especially in Core Central Region (CCR).
And it is set to improve further due to the shortage of physical supply in 2019 and 2020. So what does the shortage mean?

The Vacancy Rates are expected to improve to 5.5% by 4th Qtr of 2019, from 6.3% in 1Qtr of 2019.
This is why JLL had predicted that rental yield will improve over the next two years, especially in the CCR.

How about the 44,000 units unsold and pending approval?
Isn’t this a huge supply glut, considering the fact that the average new take-up rate from 2008-2017 is only 11,406 per year?

Let’s use the latest numbers mentioned in the Press Release by MND on 6th June 2019.

39,000 units are unsold.
5,000 units pending approval.
Plus 1,715 units to be released as the confirmed list for Government Land Sales (GLS).

Total supply from 3Q2019 – 2023 will be 45,715 units over 4.5 years.

This implies an average supply of 10,158 units. Actually below average new take-up rate of 11,406 per year.

So what is the catch?

Do not be confused by the bundling of new launches in 2019, which were the results of an enbloc fever in 2017 until July 2018 that warranted government to intervene with additional cooling measures.

However, the physical completion of the new launches in 2019 are spread out over the 4.5 years.

Actually seeing a physical shortage in 2019 and 2020.

How about the new launches next year, and the year after?

Let’s look at the two sources of land supply beyond 2023:
1) Government Land Sales (GLS)
2) Enbloc

Government is in control and reduce the land supply to a total of only 3,715 units in 2019. Nope, the government is not going to allow the value of Singapore’s property value to erode. Land is scarce and it will hold its value….

Enbloc activity has come to a virtual standstill since the introduction of cooling measures in July 2018. The land supply from now till 2023 and beyond is well-managed.

Singapore Government is adopting a very cautious stance amid the current market uncertainty. The cooling moving companies measures implemented since 2011 will help Singapore Property Market to weather any market turbulent and achieve the objective of a sustainable and healthy property market.

The above is an excerpt from a fellow colleague, an investor, a real estate advisor – Ghee Tat



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