Collective sales could yield 40% of new homes. DC hike not a cooling

According to Business Times, CBRE, the 154 collective sales since the
start of 2006 will translate into a demand of 10,249 displaced units
and be replaced by a supply of 21,719 new units. Assuming that 80%
of the owners of the displaced units look for a replacement in private
homes and the remaining 20% seek public housing, the net new supply
would be around 13,520 units. The 21,719 new units from the en bloc
are expected to account for nearly 40% of the 54,746 new
uncompleted units projected by the Urban Development Authority
(URA). Based on the 10 year average demand of around 7,600 units,
the 32,700 unsold units out of the total projected unsold units, we
estimate that it would take around 4.3 years to absorb the unsold
supply. However, according to Business Times, CBRE, the recent surge
in demand could see the absorption within three years. We are
reviewing the demand supply dynamics in the different segments and
the overall strategy for the residential property sector and will update
later.
In another update, Ministry of National Development clarified that the
Development Charge hike announced last week was not to cool the
property market or curb the en blocs. It was restored to the 1985 level
on wake of the buoyant property market for more equitable sharing of
the gains to be deployed into state functions. We continue to believe
that the revision may lower the enbloc frenzy as the developers will
have a lesser incentive due to the higher development cost and
differential premium involved and will be able to offer lesser amounts
to the en bloc sellers.