Flat glut: Developers grapple with unsold flats as supply goes through the roof
Almost 175,000 units are expected in the next 3 years.
Both private condos and HDB flats are increasing at a staggering rate, with almost 175,000 new units expected to crowd the property market within the next 3 years. This in turn will only drag prices further.
According to PropertyGuru’s Outlook Report for H2 2014, a further 65,128 private condos are expected to be completed between this quarter and end 2016, while 108,000 HDB flats will come onstream from 2014 till 2017.
For private developers, the amount of vacant units up for sale is expected to be much larger than this as a result of spillovers from the year before.
“This cycle of remnant units will continue to have a domino effect on prices year- on-year
in the long run, adding further pressure on developers to offer discounts and incentives to purchase their projects,” noted the report.
Meanwhile, the large supply of HDB flats market will influence the amount of resale flats in the market in the next 3-5 years.
“Current flat owners are more likely to set their sights on the resale HDB market rather than purchase another BTO. This is because second-time applicants must have a monthly household income of less than $12,000 to qualify for a BTO as well as the fact that they are not as favoured as compared to first-timers with families (70 to 95 percent of BTO flats are set aside for the latter). As such, the effect of higher BTO supply on resale demand is low – at least for the short term,” stated the report.