This question has been weighing the mind of Singaporeans since the beginning of time. However, it is not simply an answer of “Yes” and “No.” In order to truly answer this question we must take certain factors in account.
To reduce it to the basest form, we can say the answer to the question depends on: The population growth of Singapore versus the supply of housing needs for upcoming years.
Now, if the following conditions are true:
- There is currently no under-supply of housing needs at the moment,
- The current population growth is either higher than or in-line with the projected target of 6.5 to 6.9 million people (source: www.population.sg)
Then it is certainly true that over-supply is confirmed and thus, concerns over whether property prices and rental rates are sustainable in the long term is warranted.
Now, let us begin the analysis by plugging some reported numbers into the formula in order to form a simulation, and looking at the results that follow.
As of Jun 2013, Singapore’s present population stands at 5.4 million. Based on Singstat’s info, the average household size consists of roughly 3.5 persons. The White Paper projects a population of 6.5 to 6.9 million people. Therefore, these gives us the following facts.
- Remaining Years left to reach target population = 16 Years (2030 minus 2014)
- Remaining population increase needed to reach target figure* = 1.5 mil (6.9m – 5.4m)
(*Local birth rate included at an average of 20K per year. 16 years at this rate gives us 320K)
From these, we can conclude that
1.5m/16 = 93,750
This is the average influx of foreigners needed per year in order to reach our target population of 6.9 million!
Finally let’s find out how many housing per year is needed, based on our projection that 3.5 people live in a single household
93,750 (people) /3.5 (pax) = 26.8K/26,786 units per year
For 3 years (2014 to 2016) = 26.8K x 3 = ~80K
However, do not forget to take into account whether that we may currently be in an “under-supply situation. This is due to the fact that as of 2013, the total residential housing in Singapore stood at 1.175 million as opposed to our projected value. (source: www.singstat.gov.sg)
3.84 million local residents and 1.56 million foreign citizens add up to 5.4 million population. As of Jun 2013, the total foreign workforce (excluding foreign construction and domestic workers) stood at 743k. (Source: www.mov.gov.sg)
Therefore, our raw population with housing needs is 3.84m + 0.743m = 4.58 m
When divided by 3.5 people per household, our Actual housing needs =1.31 million units (4.58/3.5)
Thus we come to the conclusion
Projected shortage of housing – 1.31m – 1.175m = 135K units
Total housing needed for the next 3 years = 80K + 135K = 215K units.
Table 1: Estimated Housing Completion (No. of units)
|
2014
|
2015
|
2016
|
Total by Type
|
| Private^ |
17,540
|
21,299
|
27,321
|
66,160
|
| Executive Condos^ |
2,367
|
2,854
|
5,969
|
11,190
|
| HDB* |
19,283
|
33,648
|
25,547
|
78,478
|
| Total (incl. all property types) |
39,190
|
57,801
|
58,837
|
155,828
|
^ Based on URA’s Release of 4th Quarter 2013 real estate statistics
* Based on constructed started 4 years ago
Source: www.ura.gov.sg, www.hdb.gov.sg
As you can see, there is still a deficit of 59K housing (156K – 215K) in the next 3 years instead of surplus! This is without considering the different property types, which would skew the numbers even more.
As foreigners only tend to live in Singapore for a couple of years, this deficit figure could be considered healthy instead. However, if any of the theorized “under-supply” scenario occur before 2014, it is predicted that there will be a stunning 76,000 surplus of units/housing equivalent built to house an additional population of 266,000. The result would be property prices being pushed downwards, unless the government acts swiftly to remove certain cooling mechanisms in place to encourage more people to buy more property.
