IN JUST one night, over a thousand units were sold in three condominium projects, which were launched in knee-jerk reaction to the announced changes to the additional buyer's stamp duty (ABSD) and loan-to-value (LTV) limits.
Some 510 units at the 1,472-unit Riverfront Residences in Hougang were sold at an average S$1,200 per square foot (psf) - a level said to be just marginally above its breakeven price. The project sits on the former Rio Casa HUDC site, which was acquired in May last year by a consortium led by Oxley Holdings for S$706 per square foot per plot ratio.
Another condominium project, Park Colonial in the Woodleigh area, moved 310 of its 805 units at an average S$1,730 psf - above estimated breakeven price of S$1,600 psf. This project is jointly developed by Chip Eng Seng's property arm CEL Development, Heeton Holdings and KSH Holdings.
Over in Queenstown, Chinese developers Logan Property and Nanshan Group moved 200 of 1,259 units for Stirling Residences at slightly over S$1,800 psf on average.
The flurry of last-minute sales inked on Thursday reflects strong liquidity and pent-up demand in the market, which some market watchers say may support the government's view that the property market is over-exuberant.
Riverfront Residences was supposed to be launched this weekend while the original plan for Park Colonial and Stirling Residences was to start selling the following weekend. Their launches were brought forward following news that the tightened ABSD and LTV rules kick in on July 6.
Many buyers in the showflats were turned away as they would not be able to complete the option to purchase in time.
Existing projects elsewhere offered discounts that night. These included Grandeur Park, Affinity at Serangoon, Marina One, Martin Modern and Wallich Residence. According to agents, GuocoLand sold seven units at Martin Modern at S$2,650-2,850 psf and three units at Wallich Residence at S$3,050-4,000 psf after a 5 per cent discount.
For the many developers who have yet to launch their projects, they might have to revise their launch and pricing strategy. Sales are widely expected to fall significantly in the initial months ahead as the market takes stock of potential implications.
Colliers International has revised its estimate to 8,500-9,000 units for this year, 15-20 per cent lower than the 10,566 units sold by developers last year. From January to May, developers moved 3,434 private homes.
JLL head of research and consultancy Tay Huey Ying felt the measures should achieve their intended objectives of cooling demand and moderating price growth, since almost all categories of buyers are affected. "We expect sales to stall... as buyers step back to evaluate the financial implications and developers reassess pricing strategies.
"The residential market may only start to see some signs of activity in September after the lunar seventh month. Even then, we expect sales volume to stay subdued unless developers adopt competitive marketing strategies."
Colliers International research head for Singapore Tricia Song expects developers to delay launches as they tweak their strategies.
But prices will likely hold steady from this point, after rising by 7.4 per cent in the first six months of this year, she said.
"With the increased tax on investors and foreign buyers, the demand base will likely shift towards first-timers. Offerings may need to be recalibrated to match their needs. Inventory may take a longer time to sell, but developers are unlikely to reduce prices in the near term given the land costs they have already committed."
OrangeTee & Tie's research head Christine Sun said some investors may switch to other properties like commercial buildings and shophouses.
However, investors who intend to park their money overseas may face some challenges now as many countries like Hong Kong and Australia have increased taxes on foreign investors, she said.
Going by past market reactions to changes in ABSD rules, Ms Sun said sales volume will fall at a faster rate than prices. Sales could dip in the next two months, while prices of non-landed private homes will stabilise for at least the second half of this year.
Condominium projects attract a plenty of future home-buyers. Almost these developments are located in the prime location and have interesting amenities nearby. Here are some examples of the "hot" condominium developments: The Tre Ver @ Potong Pasir Avenue 1, Daintree Residence @ Toh Tuck Road, Riverfront Residences @ Hougang Avenue 7, and The Jovell @ Flora Road. With many projects launch in this year, experts hope that the sales number will be increased rapidly by the end of 2018 and continuously goes up in next year.
While first-time residential buyers remain unaffected by the ABSD rules, the lowered LTV limit at 75 per cent will affect this category of buyers as it means a greater initial cash outlay for their property purchase.
CBRE head of research for Singapore and South-east Asia Desmond Sim felt that measures are tougher on property buyers of second properties or more and also on foreign buyers. Interest from foreigners could be adversely impacted especially in the prime markets where each transaction value is larger.
"While we are not surprised at more measures given the emergence of warnings and calibrated measures since Q4 2017, we are surprised by its severity, which suggests the government is evidently fearful of a bubble building up amid a rising interest rate environment and sizeable unsold launch pipeline," Mr Sim said.
Adapted from TheBusinessTimes, Jul 7, 2018