Vacancy rates at executive condominiums (ECs) are at their highest level in more than five years.
This hybrid of public and private housing has proved very popular in recent years but experts blame a flood of new units for the spike in empty units.
The demand for resale Housing Board flats has also cooled and this means upgraders to ECs are taking longer to sell their old flats.
The proportion of vacant EC units rose to 16.2 per cent in the third quarter, up from 12.2 per cent in the second quarter and just 6 per cent in the first.
The 2,375 vacant units came mostly from newer projects, The Straits Times understands.
Since the third quarter of last year, eight new ECs with nearly 4,200 units have received their temporary occupation permits (TOP) - a 40 per cent jump in EC units, said Mr Ong Teck Hui, national research director at JLL. They are: Arc at Tampines, Blossom Residences, Austville Residences, Belysa, RiverParc Residence, The Canopy, Esparina Residences and the Prive.
Experts say HDB upgraders buying ECs are now taking three to five months to sell their old flats, up from one or two months.
Transactions in the HDB resale market have been falling, from 25,094 in 2012 to 18,100 last year.
This year's number is expected to be about 17,000, said Mr Chris Koh, director of Chris International. He expects HDB resale prices to bottom out in the middle of next year, after two years of price correction. "An overall price correction of about 10 per cent should tempt buyers back into the market."
In the meantime, vacancies are expected to keep piling up - not just in ECs, but in private condos as well. A total of 21,569 completed private residential units were vacant in the last quarter, up from 21,268 in the second quarter.
HDB resale prices have dropped for the past five quarters, with recent changes to valuation rules and to purchases by permanent residents making it even harder to sell at a high profit, said PropNex chief executive officer Mohd Ismail. "Sellers including upgraders are even having to accept prices below market value. Some are also holding out for better prices while postponing their key collections," he said.
Some would-be upgraders have given up plans to upgrade because of the erosion in purchasing power, he added.
He said EC upgraders accounted for 10 per cent to 15 per cent of the HDB transactions last year. He estimated that two-thirds of the 3,585 EC units sold last year were bought by upgraders, with the rest sold to first-timers.
HDB flat owners who buy an EC or another HDB flat have six months to dispose of their existing flats, after they have collected keys to their new units, a Housing Board spokesman said. In the first three quarters of this year, it received 166 requests from HDB flat owners for an extension of time to sell their flats. Of these, 40 were from HDB flat owners who bought an EC unit, with the rest from flat owners who bought other HDB flats.
There were no extension requests from EC buyers last year, with recent ECs only completed from July last year.
As the number of EC completions is expected to be 2,845 next year, 6,371 in 2016, and 2,505 in 2017, pressure on EC buyers to sell their homes may mount, with EC vacancy rates to also increase, said Century 21 chief executive officer Ku Swee Yong.
Another source of pressure would be the higher supply of completed HDB and private residential units available for sale, said Knight Frank Singapore research head Alice Tan.
This article was first published on November 15, 2014.
Get a copy of The Straits Times or go to straitstimes.com for more stories.