Ample private housing supply on Confirmed List to stabilise demand, supply and home prices

Private housing supply on the Confirmed List of the Government Land Sales (GLS) programme has remained above 5,000 units per half-year for two consecutive years, a move analysts believe will help stabilise supply, demand, and home prices. While private home demand is expected to grow this year on the back of lower mortgage rates, developers are likely to remain cautious when bidding for land.

Private housing supply on the GLS Confirmed List crossed the 5,000-unit mark in the second half of 2023. The last time supply reached such levels was in the second half of 2013, when total supply was substantial, comprising 5,960 units on the Confirmed List and 8,195 units on the Reserve List.

Including sites on the Reserve List, total private home supply has risen above 8,000 units since 2H 2023 and has stayed at this level ever since. Over the past two years, supply has been predominantly driven by the Confirmed List.

The last time the government offered more than 8,000 private housing units was in 2H 2018, with a total of 8,040 units. However, only 2,705 units (33.6%) came from the Confirmed List. From 2019 onwards, the total supply dipped to over 6,000 units, but housing construction delays brought about by the Covid-19 pandemic prompted the government to ramp up supply year after year.

Uncompleted and unsold residential units fell 3% quarter-on-quarter from 20,566 units in Q2 last year to 19,940 units in Q3. This healthy take-up rate of new private homes justifies the government's move to maintain a higher supply pipeline.

Ensuring an ample supply of homes not only caters to prevailing market demand, but also fosters the long-term sustainable growth of the real estate sector while boosting market confidence and stability.

Last year, the new private home market moderated, leading to rejected bids for sites at Marina Gardens Crescent, Media Circle, and the Jurong Lake District White site as the top bids were deemed too low.

Despite developers exercising caution in land acquisition, they remain keen on replenishing their land banks. GLS sites tendered last year drew an average of three bids each.

In the latest 1H GLS programme, the three sites that failed to be awarded last year have been transferred to the Reserve List. Leonard Tay, Head of Research at Knight Frank, noted: "The Jurong Lake site on the Reserve List is massive, spanning 6.47 hectares, slightly smaller than the 6.8 hectares when it was on the 1H 2023 Confirmed List. It appears that only major developers or well-capitalised consortia will be able to trigger this site for launch."

With market activity picking up in the fourth quarter of last year—largely driven by pent-up demand—private home demand is expected to remain resilient this year, supported by expectations of easing mortgage rates, healthy employment figures, and stable household balance sheets.

A total of 10 Confirmed List sites have been rolled out for 1H GLS, comprising private residential, Executive Condominium (EC), and commercial and residential sites. Among these are residential plots at Turf City and the former Keppel Club golf course, injecting a total of 5,030 residential units.

This will provide developers with sufficient land inventory, cater to market demand, and help anchor home prices.

Developers are nevertheless expected to stay disciplined, particularly when evaluating greenfield sites without prior private residential developments or plots with complex planning and construction requirements.