Govt cuts private housing supply from confirmed land sale sites due to Covid-19 fallout
The supply of private residential housing from confirmed sites under the government land sales (GLS) programme for the second half of 2020 has been reduced to take into account the fallout from the global Covid-19 situation, the Ministry of National Development (MND) announced on Wednesday morning (June 24). The private home supply of 1,370 units from three confirmed list sites is 405 units or nearly 23 per cent less than the 1,775 units from such sites under the first half of 2020 GLS programme. It is also the lowest number since the second half of 2009 during the global financial crisis when no confirmed list sites were released, said Christine Li, Cushman & Wakefield head of research for Singapore and Southeast Asia, adding that the move. The confirmed list includes one executive condominium (EC) site that can yield 615 units. Together with eight reserve list sites that can accommodate another 5,300 residential units, the total potential supply of private housing for the second half of this year comes to 6,670 units, slightly more than the 6,490 units under the GLS programme for the first half-year. One hotel site at River Valley Road, which can yield 530 hotel rooms, has been carried over from the first half-year GLS programme and rounds up the reserve list. MND noted that it has not introduced any new sites for predominantly commercial or hotel use given the economic contraction and uncertain business outlook resulting from the pandemic. As to residential supply, MND said it had "to calibrate the reduction carefully to avoid potential supply shortfalls over the medium to longer-term". "Hence we have maintained a good selection of sites with additional supply in the reserve list that developers can initiate for development if they assess that there is demand" it said. The authority also noted that it has provided a "moderate supply" in the confirmed list this time round, as the number of the unsold inventory of private housing units has declined by a cumulative 20 per cent between the first half of 2019 and this year. "Together with the supply of units already in the pipeline, this will cater to the housing needs of the population when completed in about four to five years' time" it added. Ms Li said the "err on the side of caution" move is in line with the current market conditions where there is an expected demand shock to the residential market coupled with ample unsold inventory due to dampened investment sentiment and employment prospects. But to ensure sufficient supply in the event there is a V-shaped recovery in the residential property sector, the government is still putting the bulk of the supply through the reserve list, at 5,300 units. As such, the combined total housing units is even higher than what was announced in December last year for the first half-year of 2020, before the Covid-19 situation emerged. MND said sites on the confirmed list will be launched only in the last quarter of this year. Each will also be given a longer tender period of about six months to allow developers more time to make their assessment in view of the ongoing Covid-19 situation. More time has already been given to confirmed list sites in the first half-year. with the last of three sites to be launched for sale by end-June. The tenders for the three sites will close progressively from October 2020 to March 2021. A total of four residential sites, three white sites and the River Valley Road hotel site were carried over from the reserve list for the first half-year. It includes a multi-use white site in Woodlands Avenue 2, which offers the bulk of new commercial space on the reserve list of 78,000 square metres, and a white site in Marina View, which can yield 905 residential units and 540 hotel rooms. While a lowered housing supply could lead to higher prices in theory, PropNex head of research and content Wong Siew Ying said it is not necessarily the case given the current market headwinds. "The cloudy economic outlook, a heightened level of uncertainty, and a pandemic with no end in sight will exert pressure on prices" she said. "Buyers also remain price sensitive, perhaps more so in the current economic climate. Developers would be well aware of these factors and are unlikely to be overly bullish with their land bids."