Amid a slew of property marketplace data introduced by the Metropolitan Redevelopment Capacity (URA) recently, one quantity stood out: the vacancy rate, which usually hit a 16-year optimum of almost eight. 9 % in the second quarter. This represents a formidable 35, 310 vacant private non commercial units over the island.
But while high vacancy rates usually do not bode well for the rental marketplace, this seems to be the one uncommon area of negative thoughts in a marketplace that is getting some healthful colour.
Your local store of prosperity in homes is solid still. The traditional argument that whenever vacancies up go, people unable to find tenants default on their housing loans and are forced to sell may not apply for now, as interest rates are still low especially, said an analyst. People are able to hold on to their empty unit for far longer than in the past, or deal with lower rents.
So , it wouldn’t be unusual to expect vacancy rates to continue hitting record highs, fuelled by rising home completions at the same time that housing volumes and prices continue to stabilise.
By most accounts, the sales market today is stirring as home hunters tire of waiting for further falls and start trickling back in.
It is a recovery that seems to be led by the luxury segment, districts 9 and 10 especially. This is different from the last market upturn, starting in 2009, when the recovery was led by Districts 1 and 2 – where prices are now still sliding.
One reason to believe the market is approaching a trough is in resale volumes, which have picked up across all segments. They shot up 34 per cent year on year in the second quarter to 599 in the core central region, rose 14 per cent to 620 in the rest of central region, and grew 10 per cent to 921 in the outside central suburbs or region.
At the same time, the true number of uncompleted and unsold private homes has been coming off. These amounted to 21, 489 units in the second quarter, the lowest level since the URA started collecting data on them in 2001.
Unsold stock should continue to be soaked up, given underlying demand. New product sales have stored steady around 7, 500 both a year ago and in 2014 annually.
The sales marketplace has stabilised, with no pressure from a huge wave of stock being released in.
Would-be buyers should take be aware though that rentals can easily continue dropping. And via rising source apart, rental demand — foreign-led — does not appear to be improving commonly. Vacancy prices could enter in the double numbers even.
Concerning cooling actions, the much better market belief means the federal government is improbable to fine-tune them perhaps. But there is not any hurry for doing it to create more actions also, seeing that this economic recovery could be a immediate blip.