Tweak cooling measures to avert property market risks

In his commentary “Time to tackle real estate’s structural changes” (Sept 30), the writer recommended certain changes to normalise the market situation before real estate, “the bedrock of Singapore’s economy”, is weakened further.

Although his warning may have come too late to prevent us from falling over the cliff, the remedial proposals could be used to prevent a future repetition of the current situation.

Going forward, a crisis may potentially develop on the horizon owing to the demand-supply imbalance.

The data show a dreadful trend: As of May, there is a supply pipeline of more than 57,000 private residential units.

The current average annual supply of 19,000 is more than double the recent historical average of around 9,000.

But foreign employment growth has deviated in the opposite direction, falling from 77,000 in 2011-2012 to 27,000 as of June this year.

Fewer expatriates coming here would result in reduced rental demand, which would put downward pressure on home prices.

Another seemingly aggravating factor is the declining population growth: 1.3 per cent growth this year is far from the average growth of around 2.5 per cent between 2000 and 2010.

Meanwhile, the number of resident households grew on average by 16,000 a year from 2010 to 2015, decelerating from the average 43,000 per annum from 2000 to 2010. This slowdown implies a largely falling demand for new home completions.

Nevertheless, a tweaking of the cooling measures may help to alleviate the sombre risk of a housing oversupply amid a weakening economy.