Home buyers will be so spoilt for choice this year that most won’t know where to turn – or which developer’s sweetener to take up.
The launches and freebies are already coming thick and fast with loads of new projects lined up. The news is less certain for pricing but few experts expect huge bargains on the horizon.
While some say prices might stay firm because developers have strong holding power, others predict price cuts ranging mostly from 3 to 10 per cent – depending on the segment – although there does not appear to be any industry-wide price reduction yet, apart from the various sweeteners.
Still, the Urban Redevelopment Authority’s price index inched up just 0.2 per cent in the three months to Dec 31, suggesting that a turning point might be around the corner.(Sorry buyers, this is just the seasonal trend. Wait for the next property price index. That will be a proper gauge, a true reflection of the market situation.)
But on the supply side, it’s all guns blazing. At least 10 developments were launched in the first two months of this year, including Bartley Residences, Watertown and Guillemard Edge, as firms rush to meet buyer demand, stoked by rock-bottom interest rates.
Up to 48 new private projects – more than 5,000 landed and non- landed units – may be launched this year. They range from high- end homes in River Valley, Nassim Hill and Newton to mass-market projects in Yishun, Bedok, Choa Chu Kang and Pasir Ris. But they do not include recently sold sites that could be launched by year’s end, so the total number of new projects could be even higher.
Apart from these private residential projects, at least two more executive condominium (EC) projects with another 1,100 units are expected to be launched.
So competitive is the landscape that developers have been pulling out the stops to lure buyers, with incentives like furniture vouchers and the absorption of stamp duty thrown in.
The bumper crop of new launches expected this year stems from the Government’s ramped-up land sales programme (GLS) that began in the second half of 2010 and attracted keen developer interest. It also comes from the roughly 50 collective sale deals sealed last year.
Like last year, the bulk of the new launches is expected to be in suburban areas, catering to first- time buyersand upgraders who have been powering the market over the past few years.
The pipeline supply of sites and projects will provide a variety in terms of location and pricing so buyers will have numerous options to consider, say experts.
With average unit sizes shrinking, the number of units eventually launched on GLS sites might exceed official estimates by 20 per cent or more.
Land parcels that could yield an estimated 7,000 units were placed on the confirmed list of the GLS for the first half of this year.
Mr Lee Liat Yeang, a partner in Rodyk & Davidson’s Real Estate Practice Group, agreed, saying that developers are aware of the importance of keeping homes small and hence, overall prices affordable.
‘Some two-bedroom units are smaller than 500 sq ft. These small two-bedders should appeal to investors of projects within the city or city fringe, who tend to rent out these units.’
Private home prices
Experts say that price trends are likely to be project-specific, with better located projects with strong selling points achieving higher prices.
But while developers will be cautious on pricing, they will push the market for what it will bear if there is an opportunity or when sentiment is good.
Mass-market projects in less well-located areas are expected to be priced at $800 to $900 per sq ft (psf), while better located projects like Sky Habitat in Bishan (Click here to find out more and register your interest!) could be in the $1,400 to $1,500 psf range.
However, another analyst estimates that mass-market home prices will average $1,100 psf in upcoming launches.
Homes in the city centre like Leedon Residences might go for $2,000 psf and up to $4,000 psf for Ardmore 3, he said.
In the high-end market where sales have been lackluster, developers will likely try to rent them out or delay completion as long as they can while some analysts are of the view prices might fall by a single digit.
‘Developers need to sell enough units to finance their construction costs and do not need to sell out their projects within a short period from first launch,’ added Rodyk’s Mr Lee.
‘In short, developers who have done very well in the past few years have strong holding power and should not panic-sell so long as they can clear a reasonable percentage of units in each project.’
Completed projects are an alternative for buyers in urgent need of a new home that’s not from the resale market.
The URA lists 66 projects that are completed but with unsold units as of the fourth quarter of last year. Most of these projects are in the high-end segment where sales have been slow. These include Reflections at Keppel Bay with 290 unsold, Hilltops at Cairnhill Circle with 208 and Newton Imperial with all its 36 units unsold.
ECs are an interesting segment to watch as the Government recently lifted the quota for second-time purchasers. This means that they will now be able to buy 30 per cent of units in an EC project within the first month of sale, up from 5 per cent before.
The Government has also said it is ready to supply sites for up to 5,000 EC units this year if demand remains strong.
Prices for upcoming EC launches in areas such as Pasir Ris and Yishun can be expected to range from $680 to $750 psf. While private property prices remain high, there will be buyers who opt for ECs instead as these are typically cheaper by 20 per cent or more.
The pool of eligible EC buyers has also increased with the upward revision of the monthly household income ceiling last August from $10,000 to $12,000. (There are still some units in Twin Waterfalls in Punggol! Call me at 9431 4139 for more details!)
The main advantage of buying a new EC is the price discount over private homes when they are bought, and the value boost when they can be sold on the open market and fully privatised.
Depending on location, the capital appreciation can be significant. For example, the average launch price of Bishan Loft was $420 psf in 2001 but there are resale units commanding above $1,000 psf recently.
ECs are subject to a minimum occupation period of five years. They can then be sold only to Singaporeans andpermanent residents. They become private property after 10 years and can then be sold to foreigners.
Developers are also increasingly pushing out new and creative promotions, discounts or freebies to beat the stiff competition.
There is very often an early bird or VIP preview price which can be up to 20 per cent lower than the list price. This discount gradually gets scaled back later into the launch, encouraging buyers to commit early. (Do take advantage of these early bird discounts! FOR Sky Habitat discounts, pls register with me EARLY to avoid disappointments! Click here for more information!) Some developers have also started absorbing part of the stamp duty to cushion the impact of the latest cooling measures announced on Dec 8 last year.
Far East Organization offers furniture vouchers, with the amount based on apartment size and usually given when a project attains its Temporary Occupancy Permit. It has also given additional discounts of 1 per cent, labelled Valentine’s Day or Leap Year promotions, for some projects.
Experts say that some of these incentives are an attempt to boost sales without dropping the price as doing so might damage the reputation of the developer and anger earlier buyers.
There is the good feeling when you have received a deep discount whether real or perceived.
Snazzy showflats decked out in posh furnishings can also help sway buyers, and developers are now spending more time and big bucks creating concepts and designs that appeal to different buyer segments.
The 15,000 sq ft Thomson Grand showflat along Upper Thomson Road, for example, cost $8 million to build. Its furnishings include Swarovski crystal chandeliers, Louis Vuitton luggage and Hermes plates – all to project its luxury positioning.
Source: The Straits Times – 11 March 2012