700,000 new homes by 2030: too many or too few?

http://www.businesstimes.com.sg/prem...o-few-20130201

Published February 01, 2013

GOVERNMENT'S LAND USE PLAN

700,000 new homes by 2030: too many or too few?

Three new towns to be created; more homes will be built in central region

By Mindy Tan


[SINGAPORE] More homes will be built in the central region, including the former Bukit Turf Club, Kallang Riverside, Bukit Brown, and the waterfront area around Keppel, as part of the government's long-term plan to roll out 700,000 new housing units by 2030.

Of these, almost 200,000 homes, comprising 90,000 private units including executive condominiums, and 110,000 public homes, are expected to be completed by 2016.

According to the Land Use Plan released yesterday, three new towns will be carved out: Bidadari which will have about 11,000 homes (both public and private housing), Tampines North which will have about 21,000 homes, and Tengah which will see about 55,000 homes.

While this pushes the number of homes from 1.2 million to 1.9 million homes by 2030, International Property Advisor chief executive Ku Swee Yong questioned if the addition of 700,000 homes was sufficient.

"Between now and 2030, we've got a large chunk of HDB flats built in the late 60s to early 70s that require tearing down," said Mr Ku, adding that by 2015, there will be more than 200,000 flats that will be over 30 years old.

"If we take into account the number of people who will require housing due to the Selective En bloc Redevelopment Scheme (in addition to population projections), we will need about one million new homes," he said.

On the other end of the spectrum, Savills Singapore research head Alan Cheong argued that the figures suggest a potential oversupply.

He said: "The assumptions on the housing stock under this plan points to a compounded average 2.7 per cent growth rate in housing stock but the population is projected to rise by a maximum of 1.7 per cent per annum if we take 6.9 million as the topside. This raises an interesting spectre because prima facie, unless we see family sizes decline, it points to a potential oversupply of homes."

Mr Cheong added that he expects the ratio of private to total housing stock to increase from 23 per cent at present to about 28.5 per cent by 2030. But, he said, while this may imply a greater supply of private housing, it may not necessarily translate into lower prices.

Donald Han, special adviser at HSR Property Group, said the market is unlikely to go into oversupply. "If the immigration numbers materialise, developers have every reason to be confident about the current stock and I think you'll see continued healthy bidding for land sales moving forward," said Mr Han.

"You'll need a buffer because there's no way supply can meet demand and fit it like a glove. Usually, the supply is 10-15 per cent more so there's choice for consumers, and that will allow for vacancy of 5-10 per cent," he added.

Market watchers generally concurred that the areas highlighted in the plan should see land values increase over time.

"The development plans for suburban estates and the Remaking our Heartlands (ROH) programme will make these areas more attractive to homebuyers and have a long-term positive impact on the prices and rents in these areas," said Lee Lay Kheng, associate director of research at DTZ.

Chua Yang Liang, head of research in Singapore and South-east Asia at Jones Lang LaSalle, added: "Given the current market trend, Tampines North, Bidadari and infill development within mature housing estates such as Dawson Estate and East Coast will be more popular."

About 87,000 new homes are expected from the three new towns created. Build-To-Order (BTO) projects can be expected in Bidadari and Tampines North in the next two to three years while BTO projects in Tengah are expected to come onstream in the next three to five years.

More housing estates are also being planned within the central region. The number of housing units released will depend on various considerations, including achieving a good mix of housing types. The sites will be staged for development by 2030 pending demand.

Separately, Minister for National Development Khaw Boon Wan stressed that prices of new flats sold by HDB are not linked to the resale flat market, adding that BTO prices across HDB's new launches in the past 18 months have been stable even as prices of resale flats have been climbing steadily.