The usual spike in private property sales associated with the end of the Hungry Ghost Month may be more muted this year as the market is still coming to terms with the impact of the recent introduction of new loan restrictions.
There was a flurry of activity over the weekend, with a number of condominium launches and previews, but analysts said this might not translate into the sudden, big increase in sales that is often seen at this time of year.
Mr Eugene Lim, Key Executive Officer of ERA Realty Network, said that the Total Debt Servicing Ratio (TDSR), which was introduced in June and which limits to 60 per cent the amount of one’s income that can be used to service a loan, has created a new dynamic for the market.
“While the demand is there, we expect the post-Hungry Ghost spike to be comparatively muted this year, primarily because the new measure makes loan applications a bit more difficult to process and arrange.”
“That factor, combined with the possibility that buyers may also be shopping more carefully as they might be looking at smaller apartments than before, means that the decision-making time-frame for buyers is extended,” he said.
Among the launches over the weekend, The Skywoods at Dairy Farm Road offered an initial 150 units out of the 420 at the development. As of Sunday, 45 units had been sold at an average price of S$1,250 per square foot (psf).
Mr Neo Tiam Boon, Chief Executive Officer and Executive Director of developer TA Corporation, said the company was encouraged by the weekend’s sales.
“While we witnessed strong buying interest and enquiries … sales were inevitably slower, mainly due to the tighter loan restrictions that were unveiled in June,” he said, adding that he expects Skywoods to take at least around nine to 12 months to sell.
Elsewhere, The Glades at Tanah Merah sold about 80 units out of the 200 initially offered at an average selling price of S$1,450 to S$1,500 psf. A spokesperson for developer Keppel Land said the sales were within expectations.
The Glades is next to the Tanah Merah MRT Station and close to a number of other amenities, and these are the type of qualities that should attract the interest of all buyers, including those returning to the market after the Hungry Ghost Month, said Mr Mohamed Ismail, Chief Executive Officer of Propnex.
“There’s some pent-up demand, especially for condos with good facilities, but the TDSR means there probably won’t be a huge surge in sales. There will be more transactions though over the next couple of months, not least because of upcoming new launches and because the market is getting used to operating with the TDSR.”
In such a market, developers may reduce prices to attract buyers, according to Mr Lim.
“Some developers are already tweaking their pricing to reflect the new realities of the TDSR, and if the market continues to see this more cautious approach by buyers then that trend may continue.”
Meanwhile, in the executive condominium sector, about 60 per cent of the 495 units at Sea Horizon at Pasir Ris were sold over the weekend at an average selling price of just over S$800 psf.
Analysts have said sales of ECs have been more resilient of late because HDB upgraders are attracted by their relative affordability.
Source : Today – 10 Sep 2013