property supply glut

(Updated September 3, 2020)

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.

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.

unsold new homes

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.

Unprecedented Pandemic as we entered into 2020

Covid-19 took the world by storm since the beginning of 2020. Coronavirus has affected millions of people worldwide, resulting in many deaths. Global economies are severely battered. With international cross borders almost fully closed, the tourism and travel industries face the biggest test. Stock markets crashed. Many businesses shut down. 

Singapore is not spared from the devastating impact of Covid-19 pandemic. Our government has to dig deep into our reserves to fork out $100b to save our economy and jobs. That helps to stop the bleeding temporarily. Until the vaccine is readily available, the near future remains uncertain.

Unexpected Resilience

We would think with the rounds of cooling measures, the global issues and now the Covid-19 pandemic, they would seriously 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.

In 2020, as we wrestle with the onslaught of Covid-19, home sales were greatly affected. During the Circuit Breaker from 7 April 2020 to 1 June 2020, new launches show flats were all closed and no viewings were allowed. Everything came to a standstill.

Despite this major setback, 3862 new homes were sold during the first six months of 2020.

When we entered phase 2 of the circuit breaker from 19 June 2020, there was a pent-up demand by home buyers. Developers sold an astounding 998 new homes in June and 1080 in July 2020!  

Even the private resale and HDB market all posted stellar sales figures. Our property market is well and alive!

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).

Recently when I was marketing a 4-room flat at Trivelis (DBSS) in Clementi, which had recently fulfilled its MOP, I counted there were more than 100 4-room listings put up for sale! I would assume many of these owners, like my clients, are upgrading. 

Low Interest Rates

Borrowing rates are now at historical low. This makes it attractive for home buyers and investors to come into the market.

Priced to Sell

Developers are cutting their profit margins in an earnest effort to sell off their projects. They are dangling their carrots with attractive pricing and star buys to entice buyers. This helps to spur buying interest.

new homes sold q2 2020
Source: URA

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?

As of Q2 2020, the number of unsold new homes is 27,977 (exclusing EC), with another 5,000 from GLS that have not been granted planning approval yet (source: URA Q2 report). 

With a stock of 33,000 homes, is it 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 2.66 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 4.35 years (note the figures have been adjusted as compared to the charts).

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. With the Covid-19 crisis, our government has given a six-month extension to developers.

As of August 2020, quite a number of new projects have already sold more than 50%, including the 2203 unit Treasure at Tampines. Some, like Parc Esta and Tapestry, are nearly fully sold out. 

The government has slowed down Government Land Sales (GLS) for the second half of 2020 in view of Covid-19. There will be only three Confirmed List sites and nine Reserve List sites which can yield about 6,670 private residential units.

With a projected 8500 new homes sold in 2020, and a drop in new land sales, our supply will fall faster than we think.

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

Outlook in 2020

The sentiments were very positive when we first entered 2020 until we were hit hard by the Covid-19 pandemic. The crisis may last through end of 2021 or even longer. With many countries racing against time to come up with the vaccines, hopefully it may end sooner than we think.

So far, our property market has performed better than expected despite the pandemic.

While businesses are slowly recovering and unemployment rate is kept at its lowest possible level with strong governmental support, we are weathering the crisis fairly well. 

According to a report by the Asean+3 Macroeconomic Research Office (Amro), our gross domestic product (GDP) will expand strongly by 7 per cent in 2021 after shrinking 6 per cent this year (Straits Times August 6, 2020).

With the mass market well supported by HDB upgraders and investors, mid-tier market by affluent Singaporeans and luxury market by foreigners, the outlook remains fairly optimistic. My prediction is, the market will surge once the pandemic is over.

Rental Market Is Recovering

Our rental market is still healthy. The vacancy rate has dropped to 5.4%. Rental rates still remain strong.

This recovery will boost investors’ confidence.

rental market q2 2020
Source: URA

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 pwp

Danny Han has always been in the people’s business, having spent 23 years as a church pastor, five years as an insurance agent, and the last 16 years as a property consultant.


Danny has a genuine interest in people and firmly believes in personal integrity. While helping homeowners with their property needs, their interest always takes precedence over his personal gains. Hence, Danny has consistently earned his clients’ complete trust and loyalty. Many of them have become his personal friends.


Danny received his Diploma in Mechanical Engineering from Singapore Polytechnics and Bachelor of Science from Oklahoma Christian University of Science and Arts in Bible & Psychology.


Besides keeping abreast of the property market trend and constantly equipping himself to better serve his clients, Danny is a passionate foodie, a weekend cyclist, and an avid hiker. 

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