Drowsy demand for homes won't catch surging supply until 2018, analysts warn

41,400 homes will be added by three years.

It’s a cat and mouse chase in the housing market as the supply of private housing stock is expected to remain considerable going into 2016-17.

According to analysts from Maybank Kim Eng, market data suggests that supply is expected to taper off meaningfully only from 2018, with the net increase in executive condominiums and public housing forecasted to increase by 41,400 homes for the next three years.

Maybank Kim Eng adds that this is double the 21,800 in the past decade.

“Unlike the thriving en-bloc market in 2006/7, which led to substantial demolitions of private homes, today’s dearth of en-bloc deals implies that supply is unlikely to moderate soon,” Maybank Kim Eng said.

Maybank Kim Eng also explains that these forecasts also took into account the demolition of 2,600 public units from the government’s Selective En Bloc Redevelopment Scheme (SERS).

Meanwhile, Maybank added that the private housing demand is also capped by the population target, as a population white paper published by the National Population and Talent Division in 2013 proffers a population target of 5.8-6.0m for 2020.

“Achieving the midpoint of this target implies net annual population growth of 1.3% or 71,700 pa - 29,200 residents, 42,500 non-residents - over the next three years. This is a good 44% decline from the 126,900 pa - 35,900 residents, 91,000 nonresidents - increase over the past decade and could temper end-demand for homes,” Maybank Kim Eng said.

The population curb, Maybank Kim Eng said, could also make it more palatable for the government to review its measures.