Caution remains in Singapore property market<\/p>\n
SINGAPORE (AFP): Singapore's private residential property
\nmarket is expected to be oversupplied in the next one to two
\nyears as the stock of completed units builds up and demand stays
\npoor, according to Nomura Research Institute (NRI).<\/p>\n
But the investment research house said the medium and long-
\nterm outlook for the property sector was positive.<\/p>\n
Demand has eased since the government in May 1996 announced
\ntax and credit curbs to cool down an overheated private property
\nmarket.<\/p>\n
NRI said in a report on the property market received at the
\nweekend that some 11,400 new private housing units would be
\nmarketed on average per year in 1997-1999.<\/p>\n
But the take-up of new units is expected to slide to 6,000-
\n7,000 from an average 9,500 between 1994 and 1996, it said.<\/p>\n
"In view of this, a certain level of overhang is inevitable
\nand this is likely to persist over the next one-to-two years,
\nleading to lower occupancy and rental yields with the resultant
\npressure on pricing," NRI said.<\/p>\n
Residential prices have declined 8.1 percent over the past
\nthree quarters, quarterly transaction volume has fallen 65
\npercent from its peak in the second quarter of 1996 and take-up
\nrates of most new developments have fallen to 60 percent after
\nthree to six months of their launch.<\/p>\n
Of the new housing stock due for completion this year, some
\n17.5 percent or 1,662 units remain unsold, NRI said.<\/p>\n
But the number of residential launches is not expected to
\nslacken, as developers push out more 99-year leasehold properties
\nas a result of the government's land sale program in the past few
\nyears.<\/p>\n
Demand for private housing has been running at about 9,500
\nunits per annum for the past three years, a robust upturn from
\nthe 3,000-4,000 units sold in the late 1980s and early 1990s, the
\ninvestment research house said.<\/p>\n
It said the strong demand was due to rapid economic growth
\nwhich fueled rising household incomes, as well as an increase in
\nthe number of settlers who took up permanent residency in the
\nisland.<\/p>\n
Between 1990 and 1995, the number of permanent residents rose
\n65 percent from 109,000 to 181,700.<\/p>\n
The report said Singapore's position as a regional hub, its
\nstable political and investment climate and its firm currency
\nwere a strong attraction to property buyers in the region.<\/p>\n
Nomura said the medium and long-term demand outlook for the
\nproperty sector remained positive assuming steady economic growth
\nof 6-7 percent for this city-state projected for the next few
\nyears.<\/p>\n
Eighteen percent of the population, or 560,000 people, are in
\nthe 25-34 year age group which is the prime marriage and house-
\nbuying category and indicates underlying housing demand.<\/p>\n
"Over the next five to 10 years, we expect this group to
\ncontinue to be a major force in driving housing demand," NRI
\nsaid.<\/p>\n
Rising affluence and greater financial independence mean more
\nyoung couples are staying on their own, which would also benefit
\nthe property sector, it said.<\/p>\n
Nomura said its "affordability" studies suggested good
\nunderlying support in the "upgraders' market' of households
\nmoving from public-built flats to private property and private
\nproperty-owners shifting to better homes.<\/p>\n
"Overall, we do not expect the current adjustment in the
\nresidential market to lead to a severe bust," the report said.<\/p>\n
Nomura maintained a neutral stance on property shares, which
\nhave fallen since surging in early February on unrealized hopes
\nthat the government may consider easing property curbs.<\/p>\n
The Stock Exchange of Singapore (SES) property index surged to
\na peak of 811.6 in February. On Friday it closed at 710.24,
\nretracing some 12.5 percent.<\/p>",
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