Prices of executive condominium (EC) units in some non-mature estates are likely to weaken going ahead, according to property analysts.
They said this is due to the large volume of units currently available and in the pipeline.
The EC scheme was introduced in the late 1990s, and since then, as many as 40 projects have been launched for sale. Official figures from the Urban Redevelopment Authority’s new home sales data showed that 2,195 units from these projects remained unsold in February.
Another 6,465 units are in the pipeline, based on the land parcels sold under the Government Land Sales Programme for EC developments so far.
In its latest report on the property market, DBS Group Research said the EC market is in a “somewhat oversupply situation” and this reflects a “worrying trend”, particularly so in “newer or growing estates” such as Sengkang, Punggol and Woodlands.
With the exception of the Lake Life EC in Jurong, which sold 546 of its units – almost 98 per cent – other ECs launched since November last year did not move as fast.
Based on February’s new home sales data, Bellewaters EC in Sengkang cleared about a third of its 651 units. Bellewoods – another project by the same developer, but located at Woodlands – sold close to 20 per cent of its 561 units.
Meanwhile, in Punggol, buyers picked up 25.1 per cent of the 378 units at The Amore, and 20.7 per cent of the 747 units at The Terrace.
FURTHER WEAKENED PRICES
According to DBS, this unsold inventory, coupled with the oncoming supply, may further weaken prices this year.
Said Mr Derek Tan, vice president of DBS Group Research: “At this point – while developers of these projects have yet to lower prices in a significant way – I think with competition expected to be more real in the coming quarters and as the year progresses, we expect some pressure on the prices.”
Property watchers said the potential oversupply may also affect land bids. The top bid for a land parcel at Anchorvale Crescent in February was the lowest offered for an EC site since July 2011, according to figures from the Housing and Development Board.
Developer Sim Lian Land won the tender at S$157.8 million – about S$280 per square foot per plot ratio.
“In the recent land tender, we are also seeing developers bidding as low as 20 per cent below the previously transacted price in the same vicinity,” said Mr Ku Swee Yong, CEO of Century 21 Singapore. “So we can expect that in the next one year or so, the new launches should be priced more reasonably, partially due to developers being willing to cut a bit of their own profit margins, and partially because of the lower and lower land bids.”
Already, buyers of some EC projects paid lower prices in February, compared to when the projects were first launched.
For instance, the median price of units at the Bellewaters EC last month was S$774 per square foot (psf). That is slightly lower than the S$813 psf the project was going for when it was first launched in November last year.
Source : Channel NewsAsia – 20 Mar 2015