property supply glut

Do we have a property supply glut?  This question is on the mind of many people, especially when there was an avalanche of about 60 new launches in 2019.

Glut implies supply exceeds demand. 

The simple answer is, yes, we do have a property supply glut with more than 30,000 unsold units currently.

But beware of many misconceptions people have.

For example, we have a property oversupply risk, and hence prices will come down.

Or there aren’t enough buyers to take up all the unsold new homes.

Understand How Did We Get To Where We Are Today

Weak Demand After the 2013 Cooling Measures

The Singapore property market is a highly regulated market by our Government. The intention is to prevent the property bubble from forming. In a way, this is good for homeowners.

We have learned a valuable lesson from the subprime crisis in 2008. Hopefully, history won’t repeat itself.

Since 14 September 2009, the Government started to introduce a series of cooling measures.

Just like Electronic Road Pricing (ERP) and Certificate of Entitlement (COE), after a while, people got used to them.

With each round of cooling measures, the stamp duty got higher, Loan-To-Value (LTV) got lesser, and loan tenure got shorter.

But nothing seemed to stop Singaporeans from buying private properties.

Finally, the Government introduced the killer 8th cooling measure on 28th June 2013: Mortgage Servicing Ratio (MSR) for HDB buyers and Total Debt Servicing Ratio (TDSR) for private property buyers.

As a result, demands for new homes dropped drastically between 2014 to 2016. Developers only sold an average of only 7,576 new homes (excluding EC) per annum. This number was a massive contrast to the annual average of 18,131 new homes (excluding EC) sold between 2010 to 2012. The peak was 22,197 new homes sold in 2012.

Imagine if we were to continue to sell at this rate, our current stock would be wiped out in 1.5 years!

Expectedly, during those lean years, developers were not buying lands but trying hard to clear their stocks.

unsold new homes
Source: URA

Market Recovery in 2017, En Bloc Fever and July 2018 Cooling Measure

In spite of the mother-of-all cooling measures in 2013, the property market was slowly showing signs of recovery in 2017 with prices and demand picking up.

Home prices went up 1% after three years of decline.

Inventory of unsold new homes dwindled to just over 15,000.

With the surge in demand for new homes and diminishing stocks, developers frantically started to replenish their land banks.

That resulted in an en-bloc fever with 32 collective sales in 2017 and 35 up to 5 July 2018 when the government stepped in with another damaging cooling measure.

In general, ABSD went up by 5%. For foreigners, it shot up to 20%. Loan-to-Value (LTV) dropped further. Developers also have to pay higher ABSD.

Developers were paying big bucks for the land sales because they had to compete with new Chinese players.  

The latest round of cooling measure did dampen the sales of new homes. It dropped from 10,566 in 2017 to 8,795 in 2018. 

With a total of 74 collective sales between 2016 to 2018, developers all had to race for time to launch their new projects to avoid hefty stamp duty. That brought up the inventory of unsold new homes to more than 36,000 by 2019 Q1. 

Warning of Property Supply Glut

More than two months ago, Singapore’s Central Bank issued a warning that an oversupply of apartments threatened` to push down dwelling values.

One week later, the President of the Real Estate Developers Association of Singapore, Chia Ngiang Hong, echoed the same concern.

As of 30 September 2019, there were 31,948 unsold units, twice as many as in 2017 Q2.

All the signs of property supply glut were there.

Worrying Concerns in 2019

There were so many worrying concerns in 2019.

The longstanding United States-China trade conflict.

Uncertainty of Brexit.

Tensions between Japan and South Korea.

The social unrest in Hong Kong.

Singapore’s slowest economic growth since 2009.

Unexpected Resilience

We would think with the latest round of cooling measure, the global issues and our slow economy would derail our property market. 

But our property market is not always so predictable. Often it defies human logic.

Guess what? 10,104 new homes (excluding EC) were sold in 2019, 15% higher than the preceding year.

new homes sold in 2019

Reasons For The Strong Demand

There are many reasons why the take-up rate of new homes had gone up.

En bloc owners buying replacement homes and investment properties

Those who got a windfall from their en bloc sales had plenty of money in their piggy banks. Armed with a huge payout, these home-owners were looking not only for their replacement homes but also investment properties.  

HDB Upgraders

In 2019, there was a record number of 30,169 HDB flats meeting their 5-year minimum occupation period (MOP). With their flats at the zenith of their values, many home-owners would take the opportunity to upgrade to private properties.

One common strategy is sell-one-buy-two. Potentially one couple can end up with two private properties.

For the next three years, record numbers of HDB flats will reach MOP (see chart).

Return of HNWI

In 2019, we saw a return of HNWI from the region, particularly Chinese buyers. They created a buzz in the luxury market. 

88 Boulevard, a high-end freehold project in Orchard, set a new benchmark of $5,125psf.

With the political unrest and instability in the region, Singapore stands out as a shining beacon. 108,000 millionaires around the world migrated in 2018. Singapore was one of the top 10 destinations, according to the 2019 Global Wealth Migration Review released by data consultancy New World Wealth in April 2019.

Some Notable Rich Individuals Who Made Singapore Their Home

Zhang Yong, the founder of Hong Kong-listed Haidilao International, is a naturalised Singapore resident.  He is currently Singapore’s richest man, with a net worth of almost $14 billion. 

Eduardo Saverin, at 37, a Brazilian by birth, is the lesser-known co-founder of Facebook. Saverin renounced his U.S. citizenship in 2012 before moving to Singapore. His net worth is $10.5 billion.

In 2019 Sir James Dyson moved his headquarter to Singapore. He then made news by buying Singapore’s most expensive penthouse at Wallich Residence for $73.8m. Not long after, he bought a Good Class Bungalow (GCB) in Cluny Road for about $45m.

A 20% ABSD doesn’t stop foreigners from buying our properties.

james dyson
Dr James Dyson bought Singapore’s most expensive penthouse at Wallich Residence for $73.8m

Are We Having a Property Supply Glut Risk?

Is the current stock of 32,000 homes too many?

Let us analyse some figures.

If we based on the 9-year average 12,381 sold units per annum, it will take only 2.58 years to sell out everything.

That’s not a long time span.

time taken to sell unsold homes

Even if we take the lowest average of 7,576 between 2014-2016, it will take 4.22 years.

At 2019 take-up rate of 10,000 a year, just over three years.

time taken to sell unsold homes

New Homes Inventory Will Never Hit Zero

Developers will not wait till their stock reaches zero.


In 2017, when the number of unsold homes was just over 15,000, developers were already frantically buying lands. 15,000 is a critical number.

Don’t forget; the whole construction process takes about 3-4 years. So they need the lead-time to acquire more lands and restock their new home supplies.

How Long Does It Take To Reach 15,000 Units?

If we based on the 9-year average, it will take less than only 1.5 years to reach the level of 15,000 unsold units.

And if we were to take the three bad years between 2014-2016, it will take less than 2.5 years to reach the 15,000 level.

It is not difficult to sell another 20,000 homes in the next 1.5 to 2.5 years.

Most developers have up to 2022 to 2023 to off-load their stock to meet the ABSD deadlines.

If the government does not increase Government Land Sales (GLS), we may see another round of en-bloc fever within the next two to three years.

We are not facing a property supply glut risk!

If the government does not increase Government Land Sales (GLS), we may see another round of en-bloc fever within the next two to three years.

no oversupply risk

Positive Outlook in 2020

The sentiments are very positive as we enter the new year 2020.

The US and China had finally – after almost two years of hostilities – signed a “phase one” deal.

The uncertainty of the relationship between Britain and the EU was looming for a long time until recently. Now it is confirmed Brexit will take place on 31 Jan 2020.

With the prolonged unrest in Hong Kong, many firms are now considering relocating their offices elsewhere. Singapore is a top consideration.

Singapore’s economy is showing signs of recovery after hitting bottom in 2019. 

Our economy grew by 0.7 per cent year on year in 2019, based on flash estimates released by the Ministry of Trade and Industry (MTI) on Thursday (Jan 2). It was our slowest growth since 2009. (Source: Straits Times 2 Jan 2020)

The Singapore economy may improve modestly between 1 to 2 per cent year-on-year in 2020. (Source: Channel News Asia  1 Jan 2020)

It looks like the worst may be over.

worst is over for singapore
worst is over for singapore

Rental Market Is Recovering

Our rental market is recovering. The vacancy rate has dropped to about 6%. Rental rates are slowing picking up.

This recovery will boost investors’ confidence.

occupancy rate
rising rental

Low Interest Rate

After an initial spike in borrowing rate, it has come down again when the US Central Bank cut their interest rates three times. They further announced interest rate would not change in 2020.

The low mortgage rate is good news for home-buyers.

fed cut interest rates

Is It A Good Time To Buy With So Many Unsold New Homes In The Market?

For those who are expecting developers to cut their prices to clear their stocks, it has not happened and unlikely to happen.

In the current market situation where there is a short-term oversupply, it is the best time to buy.

This is simple economics. The impact of supply and demand on prices tells us that prices will kept low when supply exceeds demand.

This is simple economics. The impact of supply and demand on prices tells us that prices will kept low when supply exceeds demand.

No unthinking developers will want to suffer loss by selling below cost. Neither will they price so high to deter homebuyers. 

They do two things.

Firstly, they keep their profit margins low.

Secondly, they roll out better products with nice designs, more features, higher quality, and using renowned architects to entice would-be buyers.

It is a known fact after selling a certain percentage of a new project, developers would almost invariably increase their prices.

If you are still waiting on the sideline waiting for market to crash or prices to drop, you can wait long long😅😂😜.

When demand rises and supply falls, prices will go up!

supply demand and price

Let’s take a look at some current new projects on the market and analyse their prices (sources: Edgeprop and SRX).

Leedon Green
Florence Residences
Garden Residences
Parc Komo

To Buy or Not To Buy?

From these examples, it is evident most developers are keeping their profit margins low.

In some cases, the prices of some transacted unit are lower than their breakeven prices!

No wonder discerning homebuyers are seeing the values and buying into these new projects.

You don’t want to miss the boat!

Remember, supply exceeds demand prices go down; demand exceeds supply prices go up.

We do have a short-term property oversupply. Give another year or two or slightly longer, the situation will change.

We are not facing a property oversupply risk, barring any unforeseen major crisis.

So is now a good time to buy? You decide.

Don’t sit on the fence; it hurts.🤣

You can Whatsapp me to get an idea of your home’s value; we can also work out a way to best use your home as a path to wealth and a happier retirement.

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Danny Han has been a licensed real estate agent since 2005. He also had five years of experience as a financial consultant. The insights and knowledge he shares in his blogs are the results of years of experience in helping many of his clients in their Property Wealth Planning.

Prior to becoming a real estate agent, Danny was a full-time church pastor (don’t be shocked!) for 23 years. Even now, he is still actively involved in church work and preaches regularly. He has also made six mission trips to Myanmar to-date.

Danny is a foodie, so during his spare time he would go with his kakis to try different “CNG” (cheap and good) food. (Be sure to check out his Holland food blog in this site).

Do feel free to drop him a Whatsapp message for a non-obligatory discussion if you are planning to grow your property wealth.

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