About 49,700 new homes expected to enter the market by FY2015, following FY2014’s 50,000 new completions, said OCBC and reported in the media.
The figure is expected to increase to 73,600 by FY2016, with the estimates including DBSS, HDB and Executive Condominium (EC) completions.
“Assuming a six million population target by 2020 from the latest population white paper, we forecast average population growth at approximately 86,000 individuals per annum from 2014 to 2020,” said OCBC.
“Assuming a conservative three persons per household, this translates to an incremental demand of approximately 29,000 physical homes per year, which points to a fairly clear physical oversupply situation ahead.”
But OCBC cautioned the level of unsold pipeline held by developers currently stands at 36,000 units. This is significantly lower compared to the historical 10-year average of 41,000 units.
“While developers are likely to ease prices ahead to move inventory, we do not foresee a fire-sale situation – similarly because of the strong balance sheets for large developers,” said OCBC.
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