http://www.straitstimes.com/archive/...llers-20131220

Govt land sales tapering 'helps buyers and sellers'

Analysts say it will help balance price and supply in property market

Published on Dec 20, 2013

By Melissa Tan


BUYERS and sellers could both emerge as winners from the Government's move to scale back land releases for public and private housing, say analysts yesterday.

They believe the easy-does-it shift on residential land signals that prices will ease moderately rather than plunge, which will come as a relief to many in the market.

Home owners worried about a dive in property values due to a glut will feel relieved as will buyers, who should get a reprieve from increasingly high home prices.

The Government made its first move on land earlier this month, opting to reduce the supply of Build-To-Order (BTO) flats after what has been a three-year public housing construction boom.

It followed up yesterday, announcing that the supply of private residential land under the Government Land Sales programme for the first half of next year will be reduced.

It said yesterday that next year's supply, coupled with ongoing projects, "is expected to be adequate" to meet the demand for private housing over the next few years.

Only enough land to yield about 11,600 homes will go on the market - the first time the number has fallen below 14,000 since the second half of 2010.

About 65,400 private homes and 10,400 executive condominium (EC) units will be completed over the next three years. ECs are a hybrid of public and private housing.

Although some analysts said the Government's housing taper signalled that the property market had reached a tipping point, most thought the scenario was not drastic.

"There is less likelihood of a tipping point being reached where the market behaves in an extreme fashion," said Colliers International research head Chia Siew Chuin.

"While there will be volume and price movements, these adjustments are likely to be moderate. Prices should not behave erratically."

Jones Lang LaSalle research head Chua Yang Liang added: "The state is merely adopting a cautionary and moderate stance - not reducing supply too drastically that could cause a severe jump in bidding prices or send a wrong signal to the market that supply is excessive."

SLP International research head Nicholas Mak said the Government was likely anticipating lower demand in coming months.

"Private home buying volume is gradually easing. Each month, it is always just one to two newly launched projects contributing to most of the private home sales. The sales from the other projects are very low. The BTO application rates are also falling," he said.

Barclays property analyst Tricia Song expects property prices to fall 5 per cent next year and by another 10 to 15 per cent in 2015.

She said a rise in short-term interest rates, to which home loan rates are pegged, could coincide with peak home supply.

"Some developers may delay launches due to weaker sentiments, but they cannot delay indefinitely as there is a time frame to completion."

The home vacancy rate could reach an unprecedented 10 per cent by the end of 2016, she said.

Savills Singapore research head Alan Cheong said: "With the market back in equilibrium, it just means that developers cannot in future price their projects on a whim and a fancy."

However, Mr Cheong said that "although we are heading towards a market that has covered its housing deficit, it is by no means oversupplied".

He reckons that private property prices in the city fringe and suburbs could still climb by 5 to 10 per cent from this year to next year.

This is unless there are rude shocks or the government adds new rules to the land tender process such as placing restrictions on foreign developers, he said.

Analysts expect new private home sales to be between 12,000 and 15,000 next year.

Their estimates for developer sales volumes in 2015 range from 10,000 to 14,000 units.

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