The residential property market has seen a significant shift in its price-to-income ratio, dropping from 17.8 years in 2021 to 12.3 years by the end of 2024, according to JLL's latest report. This improvement marks a return to levels last observed in 2012. However, the market continues to face challenges, including a structural oversupply and a decline in construction-ready units. Additionally, government land premium income has plummeted, underscoring the need for innovative policy adjustments to stabilize the sector.

Market Adjustments and Policy Recommendations

Despite improvements in the price-to-income ratio, the residential property market remains burdened by an excess supply of housing units. The number of units ready for construction on disposed sites has decreased by 33% year-on-year, leaving only 12,000 units available in 2024. Moreover, the government's land premium income has sharply declined, falling to $4 billion in the first three quarters of FY2024/25, far below the target of $33 billion for the current year.

To address these issues, Norry Lee, Senior Director at JLL, suggests enhancing the Capital Investment Entrant Scheme (CIES). He proposes fully recognizing residential property investments, allowing them to count entirely toward the $30 million eligibility threshold. Removing the $50 million minimum valuation requirement for residential properties under the scheme would make it more appealing to investors. These changes aim to stimulate investment and support the market's recovery. Furthermore, Cathie Chung, Senior Director of Research at JLL, highlights that the presence of 26,600 unsold units would naturally mitigate any potential price spikes, addressing concerns about speculation risks.

Strategic Measures for Future Development

The planned development of 900,000 units for the Northern Metropolis underscores the importance of demand-side measures to prevent underutilization. With a significant number of new units on the horizon, policymakers must consider bold strategies to ensure these properties are effectively absorbed into the market. The structural oversupply issue necessitates careful planning and innovative solutions to balance supply and demand.

Enhancing the CIES is one such strategy, as it could attract more investors and boost market activity. By fully recognizing residential property investments and removing restrictive valuation requirements, the scheme can become more attractive. Additionally, the presence of unsold units acts as a natural buffer against speculative price increases. As the market continues to evolve, the focus should remain on sustainable growth and effective utilization of resources. Policymakers and industry experts agree that proactive measures are essential to navigate the complexities of the residential property market and ensure long-term stability.