AT its recent mid-Autumn festival lunch, the Real Estate Developers' Association of Singapore (Redas) flagged the nearly 21,500 unsold private residential units in the pipeline as at the second quarter, and warned that if industry experts expect only between 7,500 and 8,500 units to be sold by year's end, it would take about three years for the market to sop up these unsold units.
Indeed, official government numbers indicate that there were 21,489 unsold private homes in uncompleted projects in the pipeline as at the end of June. This figure refers to projects with planning approval, but excludes executive condominiums.
Last year, developers sold 7,440 private homes (7,146 units in uncompleted projects and 294 units in completed ones that were still licensed). So the 21,489 unsold supply would be the equivalent of three years' demand, going by last year's volume of developers' new sales.
However, what the developers' body did not mention was that the unsold supply of 21,489 units is the lowest since Q1 2001, when the Urban Redevelopment Authority (URA) started collating such data.
And the number is only about half the recent high of 43,473 units in Q2 2008.
So the picture has suddenly morphed from one of threatened over-supply to one of possible under-supply.
This scenario becomes even clearer when the pipeline supply is broken down by geographical region. JLL's national director Ong Teck Hui said: "A proper evaluation of over-supply requires an analysis by sub-markets because of their different supply and demand characteristics."
Before doing a geographical split, however, JLL first added to the 21,489 unsold units in uncompleted projects islandwide as at end-Q2 2016, the 1,793 unsold units in completed projects that were still licensed as at the same date; this created a total pool of 23,282 unsold units.
It then broke down this figure by the three regions in URA's typology and worked out the ratio of unsold units as at end-Q2 2016 to developer sales last year for each region.
JLL found the Core Central Region (CCR) to be clearly over-supplied. The glut in the city-fringe or Rest of Central Region (RCR) was more moderate, while the suburbs or Outside Central Region (OCR) had the lowest unsold units to take-up ratio.
Here are the details:
For CCR, the 5,793 unsold units as at end-Q2 2016 translated into a whopping 14.23 times the 407 units developers moved last year.
In the city-fringe, the ratio was 4.04 times (7,603 unsold units versus developer sales of 1,884 private homes), reflecting a more moderate over-supply.
In the suburbs (OCR), however, the ratio was a low 1.92 (arising from 9,886 unsold units to 5,149 new sales). Mr Ong noted that this OCR ratio is down significantly from the 2.91 as at end-2014, when the unsold figure was 11,646 units against a take-up of only 4,000 units that year.
"But by June this year, the unsold supply had shrunk to 9,886 units, while take-up last year improved to 5,149 units - resulting in a drop in the ratio," he said.
The shrinkage in unsold units in the OCR came amid a steady contraction in housing land supply through the half-yearly Government Land Sales (GLS) Programme in the past few years - until the second-half 2016 programme.
With fewer sites up for tender, competition among developers has intensified, pushing up land bids, as was seen in this week's tender closing for a 99-year private-housing site in Fernvale Road.
Things also seem more upbeat on the developer sales front. Volumes picked up in the second quarter after two consecutive quarters of slower sales. There are also other signs of the market possibly bottoming, such as a smaller quarter-on-quarter decline in the URA overall private home price index in Q2, compared with Q1 this year.
The GLS Programme is the predominant source of supply for new private homes in the suburbs, so the contraction in the ratio of unsold units to new sales in the region is "likely to lead to the question of whether the supply of residential sites through the GLS should be increased further to provide an adequate supply buffer", argued Mr Ong.
CBRE Research's head of Singapore and South-east Asia, Desmond Sim, also expects more residential sites to be released in the next GLS Programme (for first-half 2017) to prevent land bids from escalating.
Agreeing, Savills Singapore research head Alan Cheong said: "The authorities are probably afraid of being caught off-guard by an increase in demand and of private home prices spiralling out of control again; they would rather err on the side of caution."
In 2012, the property market's heyday, developers sold 22,197 private homes. This was before the introduction of the total debt servicing ratio (TDSR) framework in mid-2013.
In 2014 and 2015, the numbers plunged to 7,316 units and 7,440 units respectively - levels that were probably suppressed not just by the TDSR but also some fence sitting.
So the question that market watchers are asking themselves now is: What is the new normal demand figure in a post-TDSR universe?
Perhaps 10,000 units, of which 6,000-7,000 units could be in the suburbs.
If this is the case, the GLS Programme is going to have to quickly catch up with demand. It will be imperative to release more sites in the suburbs and, to some extent, also in city-fringe areas.
Developers who fear that the government will roll out a massive increase in land sales will no doubt argue that despite the second quarter pick-up in home sales, a significant and sustained recovery in volumes is unlikely - as long as the property cooling measures remain in place. They may have a point, given that the economic news at home and from abroad is getting bleaker.
In deciding the quantum of GLS, the authorities will likely factor in rising vacancies amid a ramp-up in home completions. As at end-June, 8.9 per cent of completed private homes islandwide were vacant, up from 7.5 per cent in the quarter before. It is also the highest level in 16 years. Vacancies are expected to rise further before starting to ease.
Savills' Mr Cheong pointed out that the danger of runaway investment/rental demand for housing this time round is reduced, given the tight immigration policy still being in place and under the government's control.
The global economy is also weak. "The conditions that created the runaway prices from 2010 to H1 2013 are mostly absent today," he said.
Another camp, however, argues that notwithstanding the weak fundamentals in the rental market, people are still buying for investment in the belief that they will enjoy capital appreciation in the longer run.
This school believes that the government's priority would be to release sufficient land, so that those who want to buy private homes are able to - otherwise, prices are going to go up, especially in the current still-friendly interest rate environment.