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Primary sales take-up, prices may not be sustainable
Industry sources have said it is too early to tell if primary property sales take-up and prices will be sustainable.
The sustainability of primary sales take-up and prices remain unclear, given the bleak economic outlook and the substantial new supply coming onstream, reported The Business Times, citing the Real Estate Developers’ Association of Singapore (Redas).
“It is too early to conclude that recovery in primary sales take-up and current prices will be sustainable,” said Redas president Augustine Tan at the association’s 57th anniversary dinner at Ritz Carlton Millenia.
“This year, Singapore’s economy continues to move slowly due to a confluence of global uncertainties, social and political insecurity and tension in the international arena. The weak market will cause asset values and rentals to keep falling, create financial stress on businesses which will inadvertently affect employment,” noted Tan, citing weaknesses across residential, office, retail and industrial markets.
Last month, official data showed that private home rents and prices fell more steeply in Q3 2016 from the previous quarter, with 12 straight quarters of decline culminating in a 10.7 percent drop in rents and 10.8 percent fall in prices since the Q3 2013 peak. This came on top of a supply pipeline of 43,693 uncompleted private residential units, of which 20,577 remained unsold.
Regarding the punitive fees facing developers for unsold units, Tan revealed that as of end-October, about 500 unsold units in 12 developments will be affected by the qualifying certificate (QC) conditions by end-2016, with charges amounting to around S$47 million. The remission claw-back of the additional buyer’s stamp duty (ABSD) is also set to affect around 4,000 unsold units across 42 developments by 2018.
Figures from the Singapore Land Authority (SLA) indicate that the government had collected around S$58.2 million in extension fees under QC regulations as of 27 October, an increase from just S$24.9 million for the whole of 2015. In light of this, several property developers have offloaded their units in bulk — either directly or indirectly — to avoid paying the extension fees.
Some developers also noticed the unsteadiness in the market, with UOL deputy group CEO Liam Wee Sin pointing to the mixed performance in recent launches. “It means if you get your product, price point and location right in the micro-market, you can create some success factor, even in a sluggish market.”
But while recent launches registered strong take-ups, this year’s overall number of launches were fewer than in 2015, said Qingjian Realty General Manager Li Jun. As such, he expects upcoming launches to witness fluctuations in take-up rates.
The company is expected to launch its executive condominium (EC) project in Choa Chu Kang Avenue 5 next March or April.
Cheryl Marie Tay, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories, email cheryl@propertyguru.com.sg
