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 is the consequence of a strong reaction to recent leasehold condominium development releases in the Outside Central Region (OCR).

On September 7, over 75% of the residences in Sky [email protected] were sold at an average price of approximately S$2,100 psf. In July, 366 of 372 Ang Mo Kio AMO Residence units sold at a median price of S$2,110 psf. Given the high demand for suburban condos, developers should be clamoring for vacant land. While it is certainly economical to build houses, developers must first secure land.

Despite this, the government auctions for 99-year OCR plots that closed last week – two private home sites near Lentor MRT station and an executive condominium (EC) site along Bukit Batok West Avenue 5 – attracted less bids than most property experts anticipated. For the EC site in Bukit Batok, four offers were received. In a March tender with nine offers, the winning price for the next-door property was roughly S$626 per square foot per plot ratio (psf ppr).

Rising mortgage rates and building expenses are putting a pressure on the financial lines of developers. Cost increases, on the other hand, will be worthless unless purchasers are ready to pay greater prices. Developers may be signaling in their land bids that private home prices have peaked, recognizing that the real estate market functions in cycles. Apart from the lackluster response to state bids for OCR housing sites, Trendale Tower, 5 Oxley Rise, and Oxley Garden recently finished their tenders without a sale.

Yes, developers require sites in order to get development income. Private home builders, on the other hand, are taking a significant risk. They are liable to 40% Additional Buyer’s Stamp Duty (ABSD), with 35% charged upfront if all properties are finished and sold within 5 years of the purchase date.

By bidding less fiercely for property, developers are removing a classic real estate agent selling pitch: that prospective home buyers should act quickly since succeeding projects will be significantly more expensive.

If consumer buying sentiment shifts, sales momentum may fall, as many consumers who buy out of fear of missing out may prefer to wait and see.

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


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