Amid frenzied buying at new home launches, developers may be signalling a peak

by Albert02

Amid frenzied buying at new home launches, developers may be signalling a peak

Amid frenzied buying at new home launches, developers may be signalling a peak. GuocoLand sold 508 units, or 84%, of Lentor Modern’s 605 residences between September 16 and 17, with prices ranging from S$1,856 to S$2,538 per square foot (psf). The success of Lentor Modern follows a strong response to recent leasehold condominium development releases in the Outside Central Region (OCR).

At the project’s inauguration on September 7, around 75% of the residences at Sky [email protected] were sold at an average price of around S$2,100 psf. In July, 366 of 372 units of AMO Residence in Ang Mo Kio were sold at a median price of S$2,110 psf. Developers should be clamoring for land given the high demand for suburban condos. Building homes is undoubtedly profitable; however, in order to do so, developers must first secure land.

Nonetheless, governmental auctions for 99-year OCR sites that concluded last week – two private home sites near Lentor MRT station and an executive condominium (EC) site along Bukit Batok West Avenue 5 – drew fewer offers than most property advisors predicted. The EC site in Bukit Batok drew four offers. The winning price for the next-door property at a tender that closed in March, which received 9 bids, was roughly S$626 per square foot per plot ratio (psf ppr).

Rising mortgage rates and building costs are putting pressure on developers’ bottom lines. However, increased costs will be irrelevant if purchasers are willing to pay greater prices. Perhaps developers are signaling in their land bids that private home prices are peaking, recognizing that the property market moves in cycles. Aside from the lackluster response to state tenders for OCR housing sites, prime residential en bloc selling sites Trendale Tower, 5 Oxley Rise, and Oxley Garden recently ended their tenders without a sale.

Yes, developers require sites in order to earn development revenues. Private house developers, on the other hand, assume a significant risk. They are subject to 40% Additional Buyer’s Stamp Duty (ABSD), of which 35% may be charged upfront, subject to conditions such as the completion and sale of all properties within 5 years after the purchase date.

By bidding less fiercely for land, developers are removing a typical real estate agent marketing point: that prospective home buyers should act quickly since subsequent projects will be considerably more expensive.

If buying sentiment shifts, sales momentum could decrease dramatically, as many consumers who buy out of fear of missing out may instead prefer to wait and see.

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Source: https://www.businesstimes.com.sg/opinion/amid-frenzied-buying-at-new-home-launches-developers-may-be-signalling-a-peak


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