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All things considered, analysts see no looming shortage despite some indications to the contrary

Is the supply of private homes tightening as some developers have been suggesting? Official figures released yesterday showed that the number of private homes available in projects approved for sale fell in the second quarter of this year to the lowest level in almost 10 years.

But there seems to be no looming shortage. The overall supply of private homes - factoring in a longer time horizon and planned supply as well as projects under construction - rose 13.8 per cent year-on-year in Q2.

‘These days it doesn’t take very long for projects to receive approval for sale,’ a property consultant said, while interpreting the figures. ‘If developers see strong demand, they’ll quickly get sales permission and add to the pool - so we can’t conclude there’s a shortage of homes building up.’

BT’s analysis of the Urban Redevelopment Authority (URA) data released yesterday shows that the number of unsold private homes in projects approved for sale shrank to 9,761 at end-Q2 - the first time it has fallen to four digits since Q3 1996.

The Q2 figure - which covers launched but unsold units, as well as yet-to-be-launched units in uncompleted developments that have secured Housing Developer Licence and Building Plan Approval - was 13.2 per cent lower than in Q1 this year. And compared with Q1 last year, the decline was even bigger at 21.3 per cent.

But the overall supply of private homes - which covers not just projects with approval for sale but others further back in the development stream - increased 13.8 per cent from Q2 2005 to 52,251 units at end-Q2 this year.

A further split of overall supply shows that while stock from projects under construction edged up just 0.9 per cent year-on-year to 24,711 at end-Q2, the year-on-year increase for planned projects was much sharper at 28.5 per cent.

This was particularly the case for supply from projects with provisional permission (up 27.4 per cent year-on-year to 10,701 units in Q2 2006), as well as other potential supply (which more than doubled from 2,467 units in Q2 2005 to 6,538 units in Q2 2006) from sites on the government’s reserve list that have been triggered for sale by developers, as well as other developments submitted for approval.

‘There have been a lot of en bloc sales and other land deals, so developers keen to lock in development charge rates would be busy making development submissions and securing provisional permission,’ said a property consultant.

While the jury may be out on whether there could be a private housing shortage, there was cheer all round for the property market from URA’s figures released yesterday. Its private home price index rose 1.8 per cent in Q2 from Q1, higher than the 1.5 per cent gain reported in Q1.

The latest Q2 increase is also the best quarterly showing by the index in slightly over six years.

The private residential rental index posted a 2.1 per cent quarter-on-quarter gain in Q2, surpassing its 1.1 per cent rise in Q1. The office rental index rose 6.6 per cent.

And prices and rentals for shops and industrial spaces also continued to appreciate in Q2.

Developers sold in 2,527 private homes during the quarter, up 36 per cent from Q1 and taking first-half primary market sales to 4,385, slightly higher than 4,030 units in the same period last year. The top-selling projects in Q2 were One Amber (182 units), Southbank (178), The Beacon at Cantonment Road (115), The Quartz in Buangkok (100) and One Jervois (95).

The number of private homes that changed hands in the secondary market rose 33.6 per cent from Q1 to 3,118 units in Q2 - the best quarterly figure since Q2 1999.

Market watchers attribute the surge to the wave of collective sales - which are reflected as secondary market transactions - and a dearth of new launches in the mass-market segment, which could have driven potential buyers to the secondary market.

Yesterday’s URA data also showed that a slew of private residential projects received provisional permission in Q2.

They include: a 400-unit condo at the Business and Financial Centre site; 412 apartments at One North being developed by UOL Group, Kheng Leong Company and Low Keng Huat; 610 apartments at The Centris in Jurong West; and a 322-unit condo at Meyer Road by CapitaLand.

Also receiving provisional permission in Q2 were: Singapore Telecommunications for the development of 330 apartments at 71 Robinson Road; Frasers Centrepoint to develop a 240-unit condo at West Coast Road; and Brisbane Development to build 30 strata semi-detached homes at Old Holland Road.

Source : Business Times - 29 Jul 2006