Physical completions 2-3x more than record occupancy rate.
Here's from CIMB:
We retain our negative view on the Singapore residential sector as we continue to see a rising threat of vacancy with an acceleration in physical completions in 2013-15.
Vacancy rates for non-landed private units had increased from 5.9% to 6.1% qoq in 3Q12 as take-up continued to lag physical completions. URA
estimates that completions will rise from 16.1k units in 2013 to 23.1k units in 2015, 2-3x more than the historical average occupancy rate of 8k units per year.
This will be compounded by impending completions of HDB units following aggressive building in the last three years. Around 83% of local residents still live in HDB flats. Incremental demand should also come under pressure from the Singapore government’s continuous reassessment of its liberal immigration policies.
PR conversions have tapered off, a glimpse of how tighter immigration is taking shape. Rising inventories against normalised population growth do not augur well for future take-up, in our view. While prices remain at record highs on low interest rates, policy risks remain an overhang.
We forecast that physical residential prices will fall by 5% by end-FY13, with vacancy rates for private units up from 6.1% currently to 7.2%.
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