In a strategic move to manage the housing market, the Ministry of National Development (MND) announced a 7.3% reduction in land supply for private homes in the next half-year. This decision marks a shift from the previous trend of increasing land supply for seven consecutive periods. The H2 2024 Government Land Sales (GLS) programme will release land capable of generating approximately 5,050 private housing units, down from 5,450 units in H1 2024.
The reduction aligns with recent trends in state land tenders, where developers have shown increased caution. This cautious stance among developers reflects homebuyers' growing selectivity and a desire to avoid oversupply in the market.
Property analysts agree that the 5,050-unit supply for H2 2024 remains substantial, contributing to a total annual supply of 11,110 private housing units, the highest since 2013. This includes 610 units from the Zion Road (Parcel B) that has been triggered for release from the reserve list.
Several fresh sites are included in the latest confirmed list. Notable among these are a plot in Chuan Grove for about 550 private homes and a commercial and residential site in Chencharu, Yishun, projected to yield 875 private homes and 13,000 square metres of commercial space. Other new plots include a site in Holland Link for 240 homes and another in Faber Walk for about 400 homes.
Additionally, the H2 schedule features 560 units of executive condominiums (ECs), a decrease from the 710 EC units in H1.
On the reserve list, MND will offer land potentially generating about 3,090 private homes (including about 730 EC units) in H2 2024, down 10.7% from 3,460 units (including 855 ECs) in the current half. New sites include a 400-unit plot in Marina Gardens Lane and a 435-unit EC plot in Woodlands Drive 17 near Woodlands South MRT station.
The MND noted signs of market stabilization, with private home prices rising at a moderated pace of 6.8% in 2023 compared to 8.6% in 2022. The quarter-on-quarter gain of 1.4% in Q1 2024 was lower than the average quarterly increase of 2% from 2022 to 2023. This trend follows a significant ramp-up in the GLS programme, with the supply of private housing on the confirmed list growing from 3,605 units in 2021 to 9,250 units in 2023.
Developers face multiple challenges, including higher interest rates, property cooling measures, and elevated development costs. These factors have led to conservative bidding and lower participation in recent land tenders. PropNex reported a median of two bids per site in 2024, down from three in 2023 and four in 2022.
The government’s decision to moderate land supply is seen as a preventive measure against oversupply, given the lackluster response to recent tenders and the significant drop in new private home sales to a 15-year low in 2023.
Notably, the H2 GLS programme does not include new sites for mandatory long-stay serviced apartments, possibly influenced by the recent lack of bids for such sites. Instead, there are adjustments to site stipulations, such as the River Valley Green (Parcel B), which no longer requires long-stay serviced apartments.
The 60 per cent Additional Buyer’s Stamp Duty rates imposed on foreigners in April last year has affected new launch sales in the Core Central Region (CCR).
MND plans to maintain a steady land supply over the coming years, calibrated to economic and market conditions. The H2 2024 programme includes fewer large project sites, with just two plots capable of generating 600 or more homes each. However, there is an increase in sites in prime areas or the Core Central Region (CCR), reflecting a strategic shift despite challenges faced by developers in these high-price-point areas.
The government’s nuanced approach in the H2 2024 GLS programme, balancing substantial new supply with market caution, aims to support a stable and sustainable housing market. This strategic pause in increasing land supply is a calculated response to current market dynamics, ensuring that both supply and demand are appropriately managed to prevent oversupply and support market stability.