Prices of new condo units unlikely to fall: analysts

Property market activity is expected to pick up in the next two months as several new condominium projects are likely to be launched.

Analysts say this may lead to more sales transactions, especially from first-time home buyers.

But despite the property-cooling measures introduced earlier this year, they say prices of new units are not likely to fall.

Sennett Residence at Potong Pasir, with over 300 units, is one of the projects that could be launched this month.

According to agents, the average price is likely to come in at about S$1,450 per square foot.

On the adjacent site, another new project Sant Ritz will offer over 200 units.

In recent weeks, property agents have also been busy marketing projects like Bartley Ridge which is located near the future Bidadari township.

Analysts say another upcoming project that could be popular is the 36-storey Trilinq condominium at Clementi.

Nicholas Mak, executive director of SLP International Property Consultants, said: “For some developers, they will be pulling all the stops in their marketing efforts. They may get their marketing consultants or agents to do pre-launch promotion. Another thing they may look at is the amount of incentives they give to agents. Sometimes when there are lots of choices the agents may swing buyers to projects that give the agent higher commission.”

Analysts expect interest in some of these new launches to remain strong, especially from first-time home buyers who are not affected by the cooling measures introduced in January.

However, they say investment demand could slow as a result of the additional levy that investors have to pay.

Generally, some analysts say developers will adopt a “price-point” strategy to lure buyers to return to the market.

They expect developers to offer discounts of at least 5 to 7 percent or more during the initial phase of the launch.

However, don’t expect a major price cut.

Donald Han, HSR special advisor, said: “Had it not been for the ABSD (Additional Buyer’s Stamp Duty), prices would have actually jumped at least about 2 to 5 percent. But because of the ABSD, price-point pretty much remained the same as what it was. The market will be put to a test in the month of March when new launches are being offered, a test to see how the market will perform post-new measures by the government.”

Meanwhile, seven new executive condominium (EC) projects are slated to be launched this year, among them Twin Fountains in Woodlands which will be available for e-application in mid-March.

EC developer Global Property Strategic Alliance says Twin Fountains is not affected by the cooling measures and it expects healthy demand for units there.

EC developments like Twin Fountains and Forestville which had obtained Provisional Permission from the Urban Redevelopment Authority (URA) before the policy changes are not subject to the new measures, as their designs had been finalised.

Jeffrey Hong, CEO of Global Property Strategic Alliance, said: “2012 had 11 to 12 launches. In terms of launches (this year), there are already fewer than last year. The demand should be there. If you are talking about land tender, there are only 5 EC tenders for 2013 and these 5 tenders are all affected by the new ruling. The developers can only launch 15 months after they get hold of the land. So for 2014, there will not be many launches. So, 2013 will still be a good year for ECs.”

Naturally, industry players are hoping to see a good take-up rate for the units.
But they are also concerned that an overly robust sales number could trigger another round of cooling measures from the government.

Source : Channel NewsAsia – 5 Mar 2013

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