Government cuts residential land supply to lowest since 2009

SINGAPORE — The Government has cut the supply of land for residential development under its biannual sales programme to the lowest since the global financial crisis — a move that analysts say signals an attempt to stabilise the market amid a rising supply glut in the pipeline.

Under the Government Land Sales (GLS) programme for the second half of the year, four sites that can yield 2,130 homes, including one executive condominium (EC) land parcel that can be developed into 520 units, will be made available under the Confirmed List, the Ministry of National Development (MND) said yesterday.

This is 29.5 per cent less than the 3,020 units that were on the Confirmed List for the first six months of this year and the lowest since 2009, when Confirmed List site sales were suspended during the global credit crunch.

Real estate analysts said it was no surprise that the Government has once again reduced residential land supply as cooling measures and loan curbs continue to weigh on sentiment.

“This actually demonstrates the confidence of the Government that the series of demand-side cooling measures through ABSD (Additional Buyer’s Stamp Duty) and TDSR (Total Debt Servicing Ratio) have already worked, and a turnaround in the residential market is not going to happen any time soon despite a steeper cut in the supply,” said Ms Christine Li, director of research at property firm Cushman and Wakefield.

The slowdown in private-home sales has resulted in six consecutive quarters of price declines. Private home prices were down 5.9 per cent in the first quarter of this year from their recent peak in the third quarter of 2013, data from the Urban Redevelopment Authority (URA) showed.

Unsold units are also building up in the market. Ms Chia Siew Chuin, director of research and advisory at property firm Colliers International, noted that out of the estimated 72,343 private homes and 16,846 EC units that are expected to be completed from this year until 2019 and beyond, 19,359 private homes and 2,646 ECs remained unsold. Tapering the land supply will allow time for these units to be absorbed by the market, she added.

Out of the four sites on the Confirmed List, analysts singled out the Alexandra View parcel as the most attractive because of its proximity to the Central Business District as well as the Redhill MRT Station. Besides being able to house around 400 private homes, the plot can yield 2,000 square metres of gross floor area (GFA) for commercial use.

Despite the glut in the EC segment, analysts said the plot in Yio Chu Kang Road may benefit from being close to Rosyth School, although tender bids will likely be cautious in light of the number of unsold units on the market.

“It is not near any MRT station ... As a result, the development may only appeal to buyers eyeing to secure a place in Rosyth School for their children,” said Mr Eugene Lim, key executive officer of property agency ERA.

Besides the land parcels on the Confirmed List that will be put up for sale regardless of market interest, there are 13 other sites on the Reserve List that can be triggered for sale if there is sufficient interest, such as when a developer makes an acceptable opening offer. These include eight residential sites — one of which is earmarked for EC development, two mixed commercial and residential sites, two commercial sites and one white site.

Together, they can yield about 5,695 homes as well as 275,580 sq m of commercial space, mostly for office use.