While the number of completed but unoccupied private homes in Singapore is growing, property watchers believe the vacancy rate is still “healthy”, reported the media.
In fact, they even expect the number to increase over the next few years, with the suburbs witnessing the most significant increase.
In Q2 2014, the vacancy rate of completed private homes rose to its highest level since Q1 2006 at 7.1 percent, according to the Urban Redevelopment Authority (URA).
Notably, vacant units in the private residential market refer to completed units but unsold by developers, or homes purchased by buyers but are unoccupied.
Property watchers noted the present vacancy rate is still healthy for the market.
“Looking at the way prices have been behaving and of course you have the impact of the Total Debt Servicing Ratio (TDSR) and the cooling measures, it appears that around six to seven percent is the normal or healthy vacancy level in Singapore,” explained Alan Cheong, Senior Director of Research and Consultancy at Savills Singapore.
“But unfortunately, vacancies will increase as more projects get completed in the course of the next couple of years. We may even head towards double-digit levels like 10, 11 percent,” he added.
Including Executive Condominiums (EC), URA expects around 24,893 homes will be completed in 2015 while another 29,582 homes will enter the market in 2016.
In comparison, less than 14,400 homes were completed in 2013 and 20,023 homes will be expected to be completed this year.
With this, Nicholas Mak, Executive Director of Research and Consultancy at SLP International, expects the market to be challenging over the next few years, “especially in some locations where it is not proven as an established leasing market.”
These locations will likely be in the suburban areas and are not located near MRT stations or amenities, said SLP International.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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