MND's property launch for 1H11 meant to curb asset inflation

The government's move to put up 14,300 housing units for 1H11 indicates its resolve not to restrict supply that leads to continual asset inflation.

The Confirmed List of the Government Land Sales (GLS) Programme for 1H11 showed a total of 17 sites or 8,100 housing units were put up for 1H11 as well as 30 sites intended for residential development, a figure that Jones Lang LaSalle said is “somewhat similar to the supply pipeline in 2H10.”

In a statement, the real estate services firm said of the 17 sites in the GLS Confirmed List for 1H11, 3 sites were carried over from the 2H10 GLS Reserve List while the remaining were sites that were newly introduced. 

“As expected, most of these sites were concentrated in the Outside Central Region (OCR) to keep housing affordable for the masses. They are mainly located in the North and North-eastern regions of Singapore, a deliberate move by the government to develop the new estates,” Jones Lang LaSalle said.

Desmond Sim, Associate Director for Research and Consultancy said, “As the residential market continues to be closely watched by the government, the competition for the sites on the GLS Confirmed List for 1H2011 would be influenced by the take-up of the upcoming launches in the vicinity. Examples of these projects include the Prive located in Punggol and the H2O Residences located at Seng Kang West.”

As an added measure, the government has also bumped up the supply in the Reserve List by 7.5% to 6,200 housing units from a total of 13 sites for residential development in case market sentiments turned positive sooner than the government could respond to keep a lid over the asset inflationary pressure.

Chua Yang Liang, Head of Research South East Asia said, “Contrary to our expectations, the more aggressive stance taken by the state to continue to flood the market with supply signals the serious implications of an asset inflation. The risks involved far outweighs those of controlling supply, which could lead to phenomenal price hikes that are unsupported by the intrinsic values of properties and hence, a severe correction when the market turns.

However, in view of a potential supply overhang, we much prefer the government to put the emphasis on the Reserve List which responds better to market dynamics.”