Sales of private homes by Singapore developers dropped by 56 per cent for the year ended June 30, with only about 7,200 units being sold.
However, Real Estate Developers’ Association of Singapore (REDAS) believes private home prices will not drop sharply this year, despite the tight credit market and economic slowdown.
President of REDAS, Simon Cheong, said: “If it drops, it will not be much more. This is probably it, because if you look at replacement cost for apartments at the moment, including the construction costs, selling prices are close to replacement cost. At times, you can even make a case for lower than replacement cost.”
The steep decline in sales numbers was attributed to the extraordinarily good year that developers had in 2007, compared to 2008.
REDAS remains optimistic in the long term, especially with the luxury property market expecting a boost from the integrated resorts in 2010. Singapore’s development as a wealth management centre may also contribute to the growth of sales.
However, Mr Cheong says developers should exercise some caution in the short-term.
“Construction costs have crept up very high, but the good thing is that interest rates remain low, and as you know recent tenders for land, they’ve been bid very lowly or not being released or not being awarded, so I think that would moderate the supply also,” said Mr Cheong.
The Singapore Contractors Association said construction costs have pulled back a little since last year, and are expected to hold at this level for the next three years.
Source : Channel NewsAsia – 12 Sep 2008