9 Jan

Will there be a housing oversupply in Singapore in 2013-2014?

Under Market Trends, we presented the following chart on the Singapore Population to Housing Stock Ratio.

The chart suggests that we may have a housing oversupply when the ratio of population to housing stock falls below 3.9 as in the years 2000-2005 and when the ratio is above 4.2 as in the years 1991-1996 and 2008-present, we may have an undersupply of housing.

Some analysts have warned that there could be a housing oversupply in 2013-2014. Does the population to housing stock ratio indicate a housing oversupply in the years ahead? In this section, we shall attempt to answer this question.

Housing Supply Outlook

For our analysis, we have assumed the following housing supply figures:

Year	Private Residential	Change	HDB Flats	Change	Total Housing Stock
2011	268,768	10,525	914,102	15,570	1,182,870
2012	281,342	12,574	931,802	17,700	1,213,144
2013	295,124	13,782	959,802	28,000	1,254,926
2014	314,955	19,831	984,802	25,000	1,299,757
2015	341,014	26,059	1,004,802	20,000	1,345,816

The figures for private residential developments are extracted from URA's forecast of the supply in pipeline by development status and expected year of completion in the statistical report for 2012Q2. The figures for HDB flats are based on the BTO supply figures announced by HDB for the years 2010-2012. We have assumed that the BTO flats will take 2 years to be completed from the year they are launched.

Population Growth Rate

We have assumed the following scenarios:

1. Scenario 1 - Population grow at 0.5% per annum
2. Scenario 2 - Population grow at 1% per annum
3. Scenario 3 - Population grow at 1.5% per annum

	Scenario 1		Scenario 2		Scenario 3
Year	Population	Change	Population	Change	Population	Change
2011	5,183,700	107,000	5,183,700	107,000	5,183,700	107,000
2012	5,209,619	25,918	5,235,537	51,837	5,261,456	77,755
2013	5,235,667	26,048	5,287,892	52,355	5,340,377	78,922
2014	5,261,845	26,178	5,340,771	52,879	5,420,483	80,106
2015	5,288,154	26,309	5,394,179	53,408	5,501,790	81,307
2016	5,314,595	26,441	5,448,121	53,942	5,584,317	82,527
2017	5,341,168	26,573	5,502,602	54,481	5,668,082	83,765
2018	5,367,874	26,706	5,557,628	55,026	5,753,103	85,021
2019	5,394,713	26,839	5,613,204	55,576	5,839,400	86,297
2020	5,421,687	26,974	5,669,336	56,132	5,926,991	87,591

Population to Housing Stock Ratio Outlook

Based on the above assumptions, we can derive the following population to housing stock ratios :

	Scenario 1		Scenario 2		Scenario 3
Year	Population Growth	Ratio	Population Growth	Ratio	Population Growth	Ratio
2011	2.1%	4.38	2.1%	4.38	2.1%	4.38
2012	0.5%	4.29	1.0%	4.32	1.5%	4.34
2013	0.5%	4.17	1.0%	4.21	1.5%	4.26
2014	0.5%	4.05	1.0%	4.11	1.5%	4.17
2015	0.5%	3.93	1.0%	4.01	1.5%	4.09

Graphically, this is how the chart will look:

Conclusions

The population to housing stock ratios for 2013-2014 range from 4.05 to 4.26 under the 3 scenarios. If we use past history as a guide and assuming that the supply projected for completion in 2015 are not brought forward to 2013-2014 and bearing any external shocks, we are unlikely to have an oversupply of housing in 2013-2014.

Of concern though, will be if our population only grows at 0.5% per annum as in Scenario 1, housing oversupply may be an issue in 2015 or later. However, Scenario 1 is unlikely if Singapore wants its population to reach 6 million in 2020.

Afternote

Posted: 12 December 2012

The Singapore Department of Statistics has in its Population Trends 2012 report released on 28 September 2012, said that our population stood at 5.31 million as at end June 2012, up 2.5 per cent from a year ago.