Of population and populating

I have not blogged for more than 2 years now. On the property front, the past 2 years have seen non-stop increases in the price indexes offered by both URA and the NUS Dept of Real Estate. Generally, prices across all housing segments, public, condominiums and landed, have all continued on their upward trend since the trough in early 2009. As suspected, the price increases for the OCR (outside central region) increased at a faster pace as compared to the CCR (core central region). Volume has also kept up - although developers selling more than 2,000 units in a month is no longer big news. 2012 was also a record-breaking year in terms of number of units sold. All these data have been largely expected and unsurprising.

But things have been getting interesting on the population front. In 2009 and a population of 4.8 million, I had blogged about overcrowding in some places in Singapore. It was generally the consensus of the government then to target a population growth to 6 million, and I was beginning to see the merit of Japan's tight immigration policy. And then in early 2010, when our population stood at 4.99 million, the government expressed views that saw a population of 5-5.5 million as optimal. I was worried about the direction of the market then, especially with the impending oversupply of private units in 2012 and beyond. In retrospect, my fears were thoroughly unfounded.

Today, our population stands at 5.4 million. The fears of oversupply in 2012 and 2013 were unfounded, although I believe rental yields, especially in the CCR, will dip or slow down slightly alongside a slowing expat population. 

The Population White Paper has forecasted a 6 million-strong population by the end of this decade, and 6.9 million by 2030. This is the first time that the government has explicitly forecast a population alongside a detailed report on the proposed increase in infrastructure. I shall leave the headline population numbers to politics. But theoretically, these figures mean that all the flats, public or private, being churned out en masse in the next 5 years by the MND can and will be taken up. Do we think this is sustainable? In an era where people are already complaining about high home prices, the lack of an oversupply scenario simply means prices are not allowed to drop based on market forces. Are we still waiting for that dip that analysts have been (wrongly) predicting for so long? Perhaps the wait just got longer with this new White Paper.

Nevertheless, the construction and real estate sector will see much activity in the medium term, much to the delight of industry players.