At the top of his list of worries is the fact that tens of thousands of private homes have been bought off plan and a further 45,000 are in the pipeline.
He is also concerned that under the Government Land Sale Programme for the second half of 2011 a further 8,000 private units are likely to be built.
Wan believes that slow global economic recovery could hit the real estate market and there may not be the demand for such a large number of new properties.
He said the fragile economic recovery in many countries could be affected by the eurozone crisis and the Middle East crisis.
‘If that leads to a spike in oil prices and halts the fragile global economic recovery, the impact on Asia and Singapore will be direct and immediate,’ he explained.
So far the number of foreign buyers has been strong but he fears they could dwindle. In the first quarter of the year foreign buyers bought 16% of new properties. Many Singaporeans also buy properties with the intention to rent them to foreigners.
‘In the event of any external shock, both foreign demand and rental demand can fall quite quickly. The impact could be serious if the drop in demand happens at a time when there is a substantial increase in supply. Further, low interest rates will not remain so forever. The cost of borrowing and repayment must go up and households must factor this in,’ he added.
He cited a property analyst who recently said some property investors seem either ‘blissfully ignorant’ of the massive supply that will hit the market from 2013.
However, he did conceded that if all goes well, the economy will continue to grow and those who bought properties will enjoy good returns when their units are completed in the next few years.
With so many uncertainties, the Minister advises investors and upgraders to bear these considerations in mind when they go to view properties and contemplate if they should sign up.
The Ministry of National Development (MND) said it will inject about 43 sites into the government land sales programme for the second half of this year. Out of the 43 sites, 19 sites will be on the confirmed list, while 24 sites will be on the reserve list. It confirmed that 17 out of the 19 sites on the confirmed list will be for residential housing and this will yield 8,100 residential units.
