In the second half-year land sales programme, the Government has broadly kept up its cautious approach to supplying fresh development sites in an uncertain global economic environment.
But in a modest shift from recent Government Land Sales (GLS) programmes where the total number of homes on offer had been steadily cut, the potential supply of homes is up marginally this time.
Minister for National Development Lawrence Wong said in a blog post that the rise comes as there has been a slide in remaining unsold private homes as well as a pick-up in new home sales over the past year.
Another reason for the rise is that the Government has matched the supply of new private homes on confirmed sites – those put on sale regardless – in the first half of the year, as well as one “reserve” site sold.
Reserve sites get triggered for sale only if a developer puts in an offer acceptable to the Government.
The National Development Ministry will keep offering a steady supply of land for private homes and keep tabs on the market to ensure stability, he said.
“We are mindful that excessive supply in a weak market can exacerbate a decline in prices. At the same time, insufficient supply can result in a future shortage and an unwarranted spike in housing prices when demand picks up.”
Four sites are on the confirmed list, yielding about 2,170 private homes and 15,500 sq m of commercial space. This is up from four sites offering 1,560 homes in the first half-year, though the sale of a New Upper Changi Road reserve list site in February meant sites yielding 2,130 homes were in fact sold.
Including the 11 sites on the reserve list, the second half-year GLS programme could yield up to 7,545 homes and 277,080 sq m of commercial space, slightly more than 7,415 homes and 272,580 sq m of commercial space previously.
The sites with more potential were mostly on the reserve list. Confirmed list sites tend to be those the Government has good reasons to push out, observers said.
Real Estate Developers’ Association of Singapore president Augustine Tan said the mix of sites was sound as less prime suburban sites will help balance land prices and give developers more choices.
The approach of allowing developers to trigger sale based on demand is in tune with the market, he told The Straits Times. “There is still a supply overhang, but the Government is also aware that developers need sites.”
The number of remaining unsold private homes was 28,890 in the first quarter, down from 41,447 at the end of 2011, showed Urban Redevelopment Authority figures.
“The low interest rate environment together with low commodity prices suggest a bleaker future. The Government is being cautious – they know developers need more sites for their business but they don’t want to encourage over-commitment,” said Knight Frank Singapore chairman Tan Tiong Cheng.
HDB flat prices have stabilised recently and the Government would be wary of giving upgraders too many options, as the market could then come off more, he added.
Indeed, Mr Wong’s post yesterday was titled: “Finding the right balance.”