Source : Business Times – 7 Nov 2009
10 new sites signal intent to keep home prices affordable
THE government yesterday fired a clear signal that it intends to keep private homes affordable by announcing its land sales programme for the first half of 2010 earlier than expected.
The 10 new residential sites introduced through the confirmed and reserve lists will allow developers to build many more homes – some of these in executive condominiums (ECs). There will also be more plots in less pricey regions.
‘The large number of sites in the confirmed and reserve lists shows how keen the government is to cool the residential property market,’ observed DTZ South-east Asia research head Chua Chor Hoon.
The Ministry of National Development (MND) reinstated the confirmed list with eight residential sites – four are new while the other four are from the H2 2009 government land sales (GLS) programme. Of these eight parcels, three could be launched in January alone.
The government puts up sites on the confirmed list for tender according to scheduled dates. It suspended this list last October as the property market weakened, but recently decided to reinstate it as private home demand and prices surged in the last few months.
The eight parcels on the confirmed list can hold an estimated 2,925 units. This is close to the largest potential supply of 3,014 units from the confirmed list in H2 2007, since the confirmed list and reserve list system began in H2 2001.
The upcoming confirmed list is striking not just for the number of sites on it. Two of the eight parcels are designated for ECs – a hybrid of public and private housing with resale and other restrictions.
These developments cater particularly to those who can afford more than an HDB flat but are still priced out of private property.
MND also boosted the reserve list for H1 2010 with six new residential sites which can generate another 2,455 units. Sites on this list are launched only when developers successfully apply for them.
With 16 residential sites and two mixed-used sites in all, the reserve list will be able to supply 7,625 units.
Together, the confirmed and reserve lists can potentially bring 10,550 housing units into the market. This is the highest number from any half-yearly government land sales (GLS) programme since the reserve list system began in H2 2001.
Another notable point: the 26 residential and mixed-use sites on the confirmed and reserve lists are all in the outside central region (OCR) and rest of central region (RCR), where cheaper homes can be built. Of the potential supply of 10,550 units, 9,220 will be in OCR while the remaining 1,330 will be in CCR.
‘There is a balanced spread of residential sites on the confirmed and reserve lists under the GLS programme for H1 2010, offering a variety of choices for the development of affordable homes,’ the Real Estate Developers’ Association of Singapore (Redas) said. ‘We believe that there is adequate supply of housing in the pipeline to meet future demand.’
As at Q3 this year, some 59,700 private homes were already in the pipeline. Of these, 34,120 units had not been sold.
MND typically releases details on the GLS programme in December. Yesterday’s announcement came weeks earlier than expected.
According to Urban Redevelopment Authority (URA) land sales and administration senior group director Choy Chan Pong, the market has been waiting for updates since National Development Minister Mah Bow Tan said in September that the confirmed list would be reinstated.
‘Since people say there is some anxiety about housing supply, it’s better to tell people now,’ he explained.
Cushman & Wakefield Singapore managing director Donald Han reckoned that the announcement also sends a ‘don’t panic’ signal to developers seeking to replenish their land banks. The likely launch of three sites from the confirmed list in January next year could help, because ‘the longer the wait, the higher is the pent-up demand and the potential premium pricing,’, he said.
MND did not introduce any commercial, hotel or white sites to the confirmed list for H1 2010. But it did add two new hotel plots to the reserve list. The reserve list will have five commercial sites, two white sites, 10 hotel sites and one commercial-and- residential site.
The ministry also underlined that more land could come from other government agencies. Planned supply from these agencies in H1 2010 can yield commercial space with a gross floor area of around 43,000 square metres.
‘The government will continue to monitor the demand-and-supply conditions not only for the residential sector, but also for various property sectors. We will monitor it closely and review the GLS programme accordingly to ensure that supply is more than sufficient to meet demand,’ URA’s Mr Choy said.
The market had been prepared for new land supply to be introduced and major property counters managed to post gains on the stock market yesterday. City Developments shares, for instance, rose 17 cents to close at $10.02.
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