Singapore residential construction will contract -1.8% in 2018

Compounding the issue is the fact that much of the construction activity comes from public-housing scheme administered by the HDB.

The property cooling measures will likely dampen speculative investment demand in Singapore’s housing market over the coming months, BMI Research said, but they will not significantly impact new construction activity within the residential buildings sector. 

According to a report, residential construction activity in Singapore has largely been contracting since mid-2015, after housing prices reached their previous – and historical – peak, and was unchanged in recent quarters even as prices began to recover.

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“Notably, the number of vacant private residential units in Singapore sat at nearly 27,000 as of Q2 2018, which is relatively high in a historical context and close to the all-time peak of 30,000 seen in 2017,” the firm said.

Compounding the issue is the fact that much of the construction activity in Singapore’s residential buildings segment comes from the country’s public-housing scheme administered by the Housing Development Board, wherein apartments are only built after buyers commit to them.

“Singapore's weak demographic outlook does not bode well for long-term growth in public-housing market,” BMI Research said. It forecasts that Singapore's residential construction segment will contract by -1.8% in real terms in 2018, only recovering to positive territory beyond 2020.