The much anticipated annual publications — Population in Brief 2016, Population Trends 2016, and the Housing and Development Board’s (HDB) Key Statistics 2016 — as well as the Urban Redevelopment Authority’s (URA) third-quarter 2016 property report card have provided a lot of data for analysts to chew on in recent weeks.

While most indicators, such as the housing rental and price indices, in the URA’s report fell, there was one set of data that stood out as the only green dot in a sea of red. The decline in the private residential vacancy rate — in other words, an increase in the occupancy rate — by 0.2 percentage point was to me, a major surprise.

According to the URA, the total stock of private residential units at the end of the third quarter stood at 343,647, with 29,836 units sitting vacant. This implies that 313,811 units are occupied. In the previous quarter, the total stock of private residences was 338,728 units, with 30,310 units uninhabited, or 308,418 occupied units.

So while the total stock increased by 4,919 units due to the completions of about two dozen projects, the total number of private residences occupied rose by 5,393 units, thereby lowering the vacancy rate from 8.9 per cent to 8.7 per cent from the second quarter to the third quarter.

The drop in the vacancy rate due to the large take-up of private residential units looks odd given that population growth data and other indicators such as a contraction in total employment and weak macro-economic numbers should lead one to think that the rate would rise.

According to the Population in Brief 2016 report, the categories contributing to the 72,300 population growth were 33,700 new births (possibly due to a very successful SG50 celebration package), foreign domestic workers and “dependents of Singaporeans who are on Long-Term Visit Passes”.

The population growth from these three categories is unlikely to amount to any significant take-up of private housing units. Furthermore, during the third quarter, an additional 1,535 units of Executive Condominiums (ECs) were also occupied.

While we have no clear quarterly data on the stock of HDB flats and their occupancy rates, we can assume that the 25,000 additional HDB flats added to the total stock this year will be occupied (or 6,250 per quarter) due to the mandatory minimum occupation period rule. That means that during the third quarter, the Singapore property market saw a take-up of 5,393 private residential units, 1,535 EC units and possibly 6,250 HDB flats.

Where did these households come from to take up more than 13,000 dwelling units in a single quarter? New household formation, referenced against the 10-year average (2005-2015) of 21,900 marriages per year, or 5,475 per quarter, may explain about 40 per cent of the take-up. But that is if we assume that all newly-wedded couples move immediately into an independent dwelling after marriage.

To add to the demand for housing, we may also consider the roughly 7,000 divorces and annulments every year (or 1,750 per quarter), as well as assume that more singles are moving out to live on their own. But I am still unable to explain about 30 per cent of the 13,000 units taken up in a single quarter.

In the table, the increase in take-up refers to the rise in the number of dwelling units that are occupied. This is derived from the total stock less the number of vacant units. However, estimating the number of vacant houses, apartments and ECs is challenging.

As it will be too laborious and impractical to survey the entire stock of over 300,000 private residences to find out how many are vacant, the URA carries out regular surveys based on sampling several thousand addresses across the spectrum of residential types and districts.

With the random sample of addresses, the URA reviews the corresponding utilities bills of these houses, apartments and ECs to determine if they may be occupied, or vacant. A dwelling unit is considered occupied if, based on its size and property type, its total utilities bill has exceeded a certain level.

For example, a three-bedroom condominium unit with 1,300sqft of strata area showing a monthly utilities bill of over S$250 will be classified as “occupied” but a three-bedroom terrace house with a bill of less than S$50 per month is probably vacant. For cases that may be unclear, URA representatives may visit the properties to confirm the findings.

Given that vacancy rates, or the number of occupied dwelling units, are estimated through sampling household utilities bills, it is clear that we should not make conclusions on take-up rates by relying on a single quarter of data.

Based on my daily work as a property agent, I would think that the number of vacant units is likely to be 10 to 15 per cent higher than what the official data suggests.

In view of the supply of more than 120,000 dwelling units in the next three years against a backdrop of slowing employment and population growth, we should pay close attention to the trend of take-up rates to better understand the risks to housing rentals.

ABOUT THE AUTHOR: Ku Swee Yong is a licensed real estate agent and the CEO of International Property Advisor. His fourth book “Weathering a Property Downturn” is available in the bookstores.