2 biggest factors that could alter Singapore's grim residential outlook

What will offset oversupply woes?

According to Phillip Securities Research Pte Ltd, the oversupply situation will be a major factor in the gloomy outlook for residential.

Analyts noted two factors that could potentially change the grim outlook for residential segment.

Here's more:

The mass market continues the trend of having lesser individuals per residential units. Currently, based on the total residents and the total residential units, the ratio stands at an estimated 4.07 individuals per unit. We do acknowledge that this ratio is exhibiting a downwards trend.

However, for the market to absorb the upcoming 3-yr supply, we would need this ratio to lower a further 7%, at 3.78 individual per unit.

We do foresee residents continuing to favor having fewer individuals under a single roof. Nonetheless, with the aging population and the affordability issues, the ratio should not decrease much further.

Within these 3 years, this factor will not substantially negate the oversupply effects.

Investment capital influx. Under current conditions, there would be an excess of close to 100,000 residential units. Initially, we analyzed the demand stemming from the occupant-buyers, with neglecting potential absorption from investment capital.

While opportunistic investment-buyers could possibly still pick up residential units in the market, most investors would steer clear in the midst of unattractive rental yields, policy risks and a likely oversupply situation.