Chart of the Day: Over 49,000 new homes set to flood the market in 2015

Another 73,600 homes will come onstream in FY16.

The country is headed for a severe flat glut. According to OCBC, there are around 49,700 new homes set to be completed in FY15, following 50,000 new completions in FY14.

In FY16, 73,600 homes are expected to be completed. These estimates include HDB, DBSS, and EC completions.

"Assuming a 6.0m population target by 2020 from the latest Population white paper, we forecast average population growth at ~86k individuals per annum from 2014-20. Assuming a conservative 3 persons per household, this translates to an incremental demand of ~29k physical homes per year, which points to a fairly clear physical
oversupply situation ahead," stated OCBC.

However, OCBC also warned that the level of unsold pipeline held by developers is currently at 36,000 units, considerably lower than the historical 10-year average of 41,000 units and is not excessively onerous.

"While developers are likely to ease prices ahead to move inventory, we do not foresee a fire-sale situation – similarly because of the strong balance sheets for large developers," OCBC noted.