MARKET watchers have reported an increase in new sales at some private residential projects over the past fortnight, before developers implemented their planned price hikes.
When approached by The Business Times (BT), numerous developers declined to comment on the price increases, while others did not respond as at press time.
Rising land bids, the depleting supply of private homes, and robust interest at Pasir Ris 8’s (PR8) launch on July 24-25 were among the reasons for the higher unit prices.
Showsuite Consultancy chief executive officer (CEO) Karamjit Singh said: “We understand as many as 20 projects have adjusted their prices by 1 to 3 per cent, mainly for projects located outside of the prime districts.” In contrast, some projects in the prime central district actually saw prices reduced, likewise to match demand, Mr Singh said. “Overall, the market is adjusting to changes in buying patterns, affordability and supply figures.”
Steven Tan, CEO of OrangeTee & Tie, has observed price increases in the 1 to 4 per cent range, mostly implemented for selected unit types and stacks that are moving more quickly, rather than an entire project.
There was a “slight increase” in transaction volumes at certain projects in the days before the scheduled price hikes, as buyers reacted to the news and wanted to secure their units at the lower prices, he noted. “We probably need to wait another week or so, to gauge the response to the price adjustments,” Mr Tan added.
Huttons Asia CEO Mark Yip told BT: “There was an increase in new home sales in the market last week with close to 500 units sold.”
More than half of those transactions were in the Outside Central Region. This was driven by HDB upgraders, due to the large volume of flats that have passed the five-year Minimum Occupation Period as well as the buoyant HDB resale market, he noted. “This upgrader demand will drive transactions in the market in H2 2021 and 2022,” Mr Yip added.
Several projects showed slightly heavier transaction volumes during the week of July 18-25, compared to the first half of the month, going by transactions recorded in the URA Realis database.
For instance, at the 680-unit Sengkang Grand Residences, buyers snapped up 45 units at about $1,713 per square foot (psf) on average within July 18-25. Of these, 38 were transacted on the same weekend as PR8’s launch.
In contrast, Sengkang Grand moved only 24 units in the first half of July. Prices at the 99-year leasehold project, developed by CapitaLand and City Developments Limited, were expected to increase by 1 to 2.5 per cent on or around July 31.
Kingsford Huray Development’s Normanton Park saw about 46 deals in the week of July 18-25 at an average of $1,801 psf, compared to 42 deals within July 1-17. The developer raised prices in late July.
Meanwhile, Ki Residences At Brookvale, by Hoi Hup Realty and Sunway, moved 24 units at $1,851 psf on average during July 18-25. The 660-unit project’s prices went up by 3 to 5 per cent early last week, BT understands. There were 22 units sold on July 1-17, based on URA Realis data.
Sim Lian Group’s Treasure At Tampines sold 21 units averaging $1,456 psf on July 18-25. Of these, 10 were transacted on PR8’s launch weekend. The project had 20 deals in the first 17 days of last month. Agents had said price increments would take effect on Aug 2.
Other projects where units were expected to become more expensive included Parc Komo, Kopar At Newton, ticks up at some condo of repricing Parc Clematis, Meyer Mansion, and Fourth Avenue Residences, BT earlier reported.
Although PR8’s launch performance boosted developers’ confidence, some had already been mulling price hikes amid depleting supply.
Showsuite’s Mr Singh said: “As developers sell down their inventory and with HDB prices firming up, price hikes were already on the cards for projects in the mass-market locations even before PR8.” The upward price revisions at PR8 and recent land tender results “provided validation and became the trigger”, he noted.
Similarly, Mr Tan from OrangeTee & Tie said that as sales at many projects had crossed the 50 per cent or even 70 per cent mark, developers started thinking about replenishing their land banks and faced the possibility of higher land costs.
Savills Singapore executive director, research and consultancy, Alan Cheong said developers are also facing cost pressures amid supply chain disruptions due to the Covid-19 pandemic, on top of high commission pay-outs to agents.
Given PR8’s strong take-up in the face of price increases, developers of other projects believed this would be an opportune time to pass on their costs by raising prices, “knowing full well that after PR8, many of their unsold inventory now looks decently priced”, Mr Cheong told BT.
Although buyers can still tolerate a marginal price increase, they remain price-sensitive and may not accept hikes of more than 5 per cent, analysts said. “It is always difficult to plumb the depths of household wealth, but it does appear that it is much deeper than previously thought,” Mr Cheong noted.
“We now know that stagnant sales does not necessarily imply a lack of affordability but perhaps an unwilling- ness to buy until a motivation arises. That motivation was triggered by PR8,” he added.
source: The Business Times