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. Between September 16 and 17, GuocoLand sold 508 units, or 84% of Lentor Modern’s 605 dwellings, at prices ranging from S$1,856 to S$2,538 per square foot (psf). Lentor Modern’s success is the result of a robust response to recent leasehold condominium development releases in the Outside Central Region (OCR).

On September 7, around 75% of the homes at Sky [email protected] were sold at an average price of around S$2,100 psf. In July, 366 of 372 AMO Residence units in Ang Mo Kio sold for a median price of S$2,110 psf. Given the tremendous demand for suburban condos, developers should be screaming for land. Building houses is undeniably profitable; yet, developers must first secure land.

Nonetheless, the government auctions for 99-year OCR plots that ended last week – two private home sites near Lentor MRT station and an executive condominium (EC) site along Bukit Batok West Avenue 5 – received fewer bids than most property advisers projected. Four bids were received for the EC site in Bukit Batok. The winning price for the next-door property in a March tender that garnered 9 offers was around S$626 per square foot per plot ratio (psf ppr).

Rising mortgage rates and construction costs are putting a strain on developers’ financial lines. Increased costs, on the other hand, will be meaningless if buyers are willing to pay higher prices. Perhaps developers are signaling in their land bids that private home prices have peaked, realizing that the real estate market operates in cycles. Aside from the underwhelming response to state bids for OCR housing sites, premier residential en bloc selling sites Trendale Tower, 5 Oxley Rise, and Oxley Garden recently completed their tenders without a sale.

Yes, developers need sites to get development revenue. Private home builders, on the other hand, take a substantial risk. They are subject to 40% Additional Buyer’s Stamp Duty (ABSD), of which 35% may be levied upfront if all properties are completed and sold within 5 years of the purchase date.

Developers are deleting a common real estate agent marketing pitch by bidding less aggressively for land: that prospective home buyers should act fast since succeeding projects will be far more expensive.

If buying sentiment alters, sales momentum could plummet, as many consumers who buy out of fear of losing out may prefer to wait and see.

Click the image to read the full details of report.
Source:
https://www.businesstimes.com.sg/opinion/amid-frenzied-buying-at-new-home-launches-developers-may-be-signalling-a-peak


Discover Your H
ome Here

Come and Experience it Yourselves
One Pearl Bank
Book ShowFlat Appointment


Proudly Developed by : CapitaLand

You may also like

error: Content is protected !!