The Housing Supply – Surplus or Shortage?
Depending on who you speak to, or which articles you read, there are differing opinions on the state of the housing market in Singapore, specifically in terms of whether there is a housing shortage or if in fact we have a glut. So both arguments can’t be right, or can they? Here we examine both sides of the story.
A Housing Surplus
According to official government figures there were 21,459 private homes in uncompleted projects currently unsold as of the end of Quarter 2 this year. This figure excludes all executive condominiums, but includes all other projects where planning approval has been granted. To put that figure in perspective, industry experts predict that by the end of this year, there will have been between 7,500 and 8,500 units sold. This would be a slight increase on last year when slightly fewer than 7,500 were sold (7,146 in uncompleted projects and 297 units in completed but licensed projects).
So, in other words, that number represents three years demand worth of units, even before new ones are added to the pipeline. If we break the figures down by region, this figure becomes even more startling. According to JLL, the core central region is the area that is suffering most dramatically from over supply. That region accounted for 5,793 of the island’s unsold units, and when you consider that last year only 407 units were sold in that region there is no doubt there is an issue, with supply outstripping demand by more than 14 to 1.
A Housing Shortage
Carrying on from the JLL data, if you go outside the central core to the city fringes, and then to the suburbs, it is a very different story. There, the ratio drops to 4.04 to 1 and 1.92 to 1 respectively. Both these areas account for more actual units so it seems that the anomaly of the core region does skew the figures somewhat.
And if we take another look at the statistics for the island as a whole, and this time put it in a historical context, a different picture emerges. The 21,459 unsold units may sound high, but it is actually the lowest it has been since the Urban Redevelopment Authority (URA) began collecting the figures in 2001. Even as recently as the second quarter of 2008, the number of unsold units was 43,473 – more than twice todays figure.
Uncertainty in the economy and measures such as TDSR have made it more difficult to predict what “normal” demand actually is. But in the city fringes and suburbs it would appear that if current demand stays as it is or increases which is more likely, then those regions will soon see a very real housing shortage, with all the repercussions that that has. The dearth of private en-bloc sales in recent years, coupled with the shortage of government land that is available for sale in prime areas will only exacerbate this problem.
Like all issues, particularly where money is involved, there are two sides to the story, and it is important to not simply take facts and figures on face value without drilling down a bit further to discover exactly what they are telling us.
Going back to the question that we started with – is there a housing surplus or shortage? It very much depends on what region you are talking about!
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