Private home supply glut hits 14-year high in Q2

7 out of 10 new units remain unoccupied.

A staggering number of brand-new private homes remain cold and empty across the island, as private home supply hit record levels in Q2 while new take-ups remained painfully lacklustre.

Statistics released by the URA revealed that net new supply reached 4,715 completed units in 2Q 2014. According to Colliers, the last time the net new supply exceeded the 4000-mark was in 2Q 2000.

“Downside pressures from the increase in new home completions continued to weigh on rents of private homes in 2Q 2014. The all private residential property rental index eased by another 0.6% QoQ following the 0.7% fall in 1Q 2014. This exceeded the corresponding net new take-up of 2,731 units by 72.6%. Consequently, the occupancy rate slipped to 92.9% in 2Q 2014 from 93.4% in 1Q 2014,” noted Colliers

Here’s more from Colliers:
Over the next six months, the air of caution is expected to linger, as long as the punitive cooling measures and stringent loan curbs remain in place.

Developers, though likely to continue to push out their projects, are expected to be more selective with their launches and re-launches.

Prospective buyers and investors are expected to adopt a tentative stance in anticipation of further price declines on the back of various downside risks. Primary home sales which stood at 4,409 units at half-time, could come in at between 7,000 and 9,000 units for the whole of 2014.

Given that private home prices recorded a moderate 2.3% decline over the first six months of 2014, the price fall for the whole of 2014 will likely come in at the lower end of the initial -5% to -8% forecast.

Plagued by tepid demand, the lacklustre high-end/luxury segments could witness larger average price declines ranging from 10% to 15% for the whole year. This is following a 5.0% slide in 1H 2014.