22/10/2014
One of the original cause for concern that precipitate the ramp up in BTO supply and land sales was the rapid increase in property prices of 55%, surpassing income growth in the same period. With a drop in supply while income continues to increase albeit at a slower pace than property prices in the past, income level will eventually catch up with property price increase.
At the same time, with reduced land sales, developers may become more competitive in their bid to replenish their depleting land supply. Thus land bid prices may not reduce, but may even increase especially for popular locations and those with major masterplan transformation.
So if land cost continues to increase as it had even in 2013 and 2014, despite a slew of cooling measures, new launch prices are not expected to be reduced drastically as there is only so much a developer can shave off their profit margin, with land and construction costs continuing to rise.
Barring major economic malaise, those waiting for dramatic price drop like those seen in the Asian Currency Crisis may find themselves waiting for a long long time..After all, the government has clearly said that they are not looking for sharp drop in prices but for a more stable and sustainable property market. Hence the rather muted 6% drop in prices despite all the cooling measures since 2011.
That is the big picture. At individual project level, abnormalities have been observed where freehold properties in the same area are selling at the same price as 99 leasehold or where high-end City Fringe condos sell at the same price as Mass Market suburban projects. To be able to spot a bargain, one need to know what should be the prevailing market value....
Singapore Housing - Despite plans to cut the number of new HDB flats by 25 per cent next year, prospective buyers need not worry. Read more at straitstimes.com.