Fears of private homes oversupply for the upcoming year have lessened, and there is a possibility of having a shortage.
The real estate stat for Q2 of Urban Redevelopment Authority (URA) released last day suggest that any probable oversupply has been predicted to occur in 2011 or maybe later as developers of private property cut down and delay projects.
The total private homes expected to be completed next year was reduced to only 5,394, down by 70 percent from 17,454 estimate last year during the last boom.
Buying homes has once again reached the levels during the boom, just as home developers have lessened their building process.
For the last three months, over 1,000 sales of private homes have been recorded each month. Since 2000, the private home sales have an average of 8,000 units.
This only means that rents and prices of private homes could soar the following year, as the private property supply in 2010 may not be able to meet the demand, especially when the strong sales continues.
Of course caveats will be applied, say market watchers. The statistics of URA rely on the figures provided by developers, and each quarter changes were seen before.
The number of units completed could be different from the number of units sold, as home developers was unable to make sales from completed units as well as could not sell units that were uncompleted.
Based on URA’s statistics during the 2007 and 2008 boom, developers, who are confident for private homes purchases, would gain licences for selling 11,150 units this year and another 9,188 units next year.
However, the fall of Lehman Brothers in September and the recession it caused last year triggered fears that many private homes would be present in the market for next year despite the economic slowdown.
Due to concerns that no sales would be made from the units, developers have cancelled several projects and delayed the completion of other units. This resulted to the decline in the total units planned to be completed this year and years to come. It has decreased by 6,000 to 62,350 from the estimated 68,000 in Q1 of 2008.
Although most of URA’s figures for projected completion have gradually declined from Q3 last year to Q1 this year, it only shows the company has only bottomed out.
Last years’ Q3 expected about 13,400 to 16,000 units would be completed each year after 2010. This figure fell to 12,100 from 13,900 in Q4 and then to 10,900 from 13,800 in Q1 this year.
Although this range still remains under the levels of pre-recession, it has soared slightly in Q1 this year to 11,200 to 13,600 units per year starting from 2011 and onwards.
The main part of the project completions has been moved to 2011 onwards, with figures on project completion by 350 each year since Q1.
Recently, 5,158 units of private homes have been completed in the first half of the year, and 1,051 additional units are expected by URA to be ready for the next six months.