Latest official statistics showed that
developers' housing sales continued to languish last month, but the focus now
is on the likely launches for the rest of the year and how much room developers
have to price them attractively to get potential buyers into making a
commitment.
Many developers paid high prices for
99-year private housing sites at state tenders in the past couple of years as
they sought to replenish land following strong home sales at the time.
"Those with a high breakeven cost
but who need to launch a project are likely to adopt a "Star Buy"
strategy for inferior stacks of units in the development to draw out initial
take-up to drive confidence in the launch," a seasoned developer told BT
yesterday.
There will be heightened competition for
buyers as more property launches are expected by developers who had bought
residential land after December 2011. These developers are required to complete
the projects and sell all units within five years, otherwise they would have to
pay a hefty additional buyer's stamp duty on the land prices with interest,
said Chia Siew Chuin, director at Colliers International.
Even amid weak July developers sales
released yesterday by URA, evidence is surfacing of developers successfully
drawing out buying demand through attractive prices, highlights SLP
International executive director Nicholas Mak.
The number of new homes sold last month
was about 10% more than the 434 units that went on the market, indicating that
buyers could have been lured by price cuts to projects launched earlier.
"For instance, Wheelock released
The Panorama in Ang Mo Kio in January this year, posting a median price of
$1,343psf for sales in that month. But since it reduced prices in May to the
$1,200-plus psf level (median price), this project has been among the top
sellers every month," Mr Mak said.
"This goes to show that developers
can revive sales at existing launches with meaningful price cuts. What remains
to be seen, however, is whether this will result in a price war, which could be
triggered, for instance, if one player were to sharply cut prices relative to
other projects in the vicinity."
URA's July data also revealed that the
remaining 37 units at The Vermont on Cairnhill, which was completed last year,
were sold at $2,113psf median price in July. This is 8.6% below the $2,313psf
median price, based on caveat data, for all previous sales in the project by
its developer, said OrangeTee research head Christine Li.
"Vermont
Developers sold just 484 private homes
excluding ECs in July. This was a paltry
0.4% higher than the 482 private condominium and apartment units moved in June
- which was a 68% drop from May. In July last year, the figures was also 482
units.
There were only four new launches last
month - of which three were in the city fringe. The city fringe also accounted
for the lion's share of new sales last month, at 46%. The suburbs made up 36%
and the city centre, 18%.
The top seller was City Gate on Beach Road Kitchener Road
Analysts said last month's poor
showing was likely to drag on into this
month.
"As the Hungry Ghost Festival falls
in August this year, developers are generally expected to continue to hold back
on their project launches," said Ms Chia of Colliers.
She expects new home sales to come in at
between 200 and 500 units this month, before picking up again towards next
month.
In the first seven months, developers
sold 4,839 private homes and 354 EC units. For the whole of last year, the
figures were 14,948 private homes and 3,588 ECs.
Some market observers expect genuine
buyers to increasingly head for the resale market to pick up a completed
property, including units in newly completed projects.
Source: BT,
ST
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