Land supply for private homes raised

SINGAPORE — For the first time since 2013, the Government has increased the supply of land for residential development in the second half of this year under its biannual sales programme — a move some analysts say could be in response to stronger demand by developers amid a decline in the number of remaining unsold homes and a recent pick-up in transactions. 

However, those looking for any sign of a potential easing of property regulations are likely to be disappointed. The relaxation of cooling measures is dependent more upon the severity of price corrections than new Government Land Sales supply, which affects stock in the long term. In the short term, analysts said, the current cooling measures are unlikely to be tweaked, as various ministers have stressed repeatedly.

Under the Government Land Sales (GLS) programme for the second half of the year, three private housing sites and one mixed development (residential and commercial) site -- with a potential yield of about 2,170 homes -- will be made available under the Confirmed List, the Ministry of National Development (MND) said on Wednesday (June 8).

This is 39 per cent more than the 1,560 units that were on the Confirmed List for the first six months of this year, and the first increase since the government started tapering the GLS Programme three years ago, when it cut the supply of private homes under the Confirmed List to about 6,900 for the first half of 2013, from 7,100 in the second half of 2012.

However, if the sale of a Reserve List site in New Upper Changi Road in February is taken into account, the number of units in the second half is closer to the actual supply of 2,130 private homes committed in the first half of this year. 

National Development Minister Lawrence Wong said in a blog post on Wednesday that the government looked at several factors when considering the land quantum: namely the actual supply of homes committed in the first half, a decline in the number of remaining unsold private homes, as well as the corresponding pick-up in new private home sales at a monthly average rate of 600 units over the last 12 months.

“Excessive supply in a weak market can exacerbate a decline in prices. At the same time, insufficient supply can result in a future shortage and an unwarranted spike in housing prices when demand picks up,” Mr Wong said in a blog post titled Finding The Right Balance. “We will continue to monitor the market closely, and find the right balance to ensure sustainable housing prices and a stable property market.”

The supply announced under the latest GLS programme is sufficient to sustain developers’ hunger for land, to provide a level playing field for developers to build up their land banks and for the market to absorb unsold stock, said Mr Desmond Sim, head of CBRE Research in Singapore and South-east Asia. 

Developers contacted by TODAY declined to comment.

“On a half yearly basis, there are a few permutations that the government can adopt on the supply side without affecting the medium term supply outlook,” said Mr Alan Cheong, senior director of research & consultancy at Savills Singapore. “This time round, the authorities may be trying to meet developers’ demand for land after observing a recent spate of healthy bids at GLS and collective sales sites … The increase in supply on the confirmed list for the H2 programme can easily also be throttled back in the H12017 programme if developers show lackadaisical interest. Conversely, the H12017 GLS programme can be ramped up if developers’ appetite from the earlier half yearly launch was strong.”

Unlike previous GLS programmes, there is no site zoned for Executive Condominiums (EC) in the Confirmed List - a first time occurrence since the second half of the 2009 GLS programme, OrangeTee noted.

“The lack of EC sites in the Confirmed List indicates concern over the number of unsold EC units in the market,” OrangeTee’s Celine Chan and Wong Xian Yang said in a report. 

“As of end April, there are 4,010 unsold EC units … Assuming the Sumang Walk EC site (on the Reserve List) is not activated and the 15-month waiting period for developers remains unchanged, the tapering of EC land supply could lead to a dearth of EC launches in 2017 and 1H2018, they added. 

Out of the sites on the Confirmed List, analysts singled out the mixed development parcel at Upper Serangoon Road as one of the most attractive. Besides being able to house around 825 private homes, the plot can also yield 15,000 sq m of gross floor area (GFA) for commercial use.

“The commercial site at Upper Serangoon Road is the main retail amenity for the new housing estate coming up in Bidadari,” said Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants. “There’s a lot of hype on this estate. Similarly the commercial site should see strong interest as well. As with the housing estate, it is popular because it is pretty central close to city and nestled among mature estates.”

The other three new sites on the Confirmed List span across the island in the North East, Central and West Coast.

There has been a conscious effort on the part of the government to focus on sites in suburban areas, as these are the preferred locations for most first-timers and upgraders, Mr Wong said in his blog post on Wednesday.

In line with this, two of the housing sites under the Confirmed List are in areas outside the Central Region – at Fernvale Road in Sengkang and West Coast Vale in Clementi.

The third site, on Perumal Road, is located near Farrer Park MRT station, just opposite City Square Mall. Market watchers, including Mr Eugene Lim, Key Executive Officer of ERA Realty Network, expect the project to be popular with buyers if priced attractively.

“(Developers’ appetite) is growing for suburban areas where owner occupier demand is resilient,” added Suntec’s Mr Tan. 

Besides the Confirmed List sites, which will be put up for sale regardless of market interest, there are 11 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 seven residential sites (including one EC site), one commercial and residential site, two commercial sites and one white site. These sites can yield about 5,380 private residential units (including 780 EC units) and 261,600 sqm GFA of commercial space, mostly for office use.

Correction: An earlier version of this report said 272 sqm of commercial space was offered in the 1H2016 GLS Programme. This is incorrect. 272,600 sqm of commercial space was offered in the 1H2016 GLS Programme. We are sorry for the error.