Chart of the Day: Targeted housing completions reduced for 2013, 2015

Can the 'supply situation' be managed?

According to Credit Suisse, total completions increased 16% QoQ to 3,685, bringing YTD completions to 9,519.

As it had highlighted in its recent sector report, Proprietary Housing Survey, although the supply pipeline looks to be concerning at the first glance, it believes that the supply situation could be managed such that adjustments could be made to avoid significant oversupply.

Here's more:

We have seen in the past, due to resource limitations as well as market forces, supply can be delayed.

Earlier in 1Q12, URA was looking at 13,801 units to be completed in 2012 and as at 4Q12, the number was 10,329. We can see from the Chart that total units under construction and planned for completion in the respective years have been reduced.

Hence, we reiterate our view where prices are expected to remain relatively flattish as the government will likely try to balance affordability and ensure that the wealth of its voters is not significantly “compromised” (by not allowing prices to crash), or its results at the 2016 elections could be at risk.