Developers to keep playing quantum price game this year
Developers sold 8, 136 private homes last year, up 9. 4 per cent from the 7, 440 units they moved in the previous year – and the best showing in three years. The pick-up is a reflection of improved sentiment and require, say industry analysts.
The account manager condo (EC) market placed even more breathtaking sales growing. Preliminary administration numbers indicate that coders found potential buyers for 5, 018 EC units not too long ago – ” up ” 57. some per cent from 2, 550 units on 2015 and a four year high. Natural pricing by means of developers is cited being a key factor pertaining to the superior primary-market gross sales of ECs, which are a good public-private homes hybrid.
The 2016 gross sales figures are actually preliminary, depending on the December builder housing sales data released on Monday by the Urban Redevelopment Authority. The numbers will be finalised on Thursday next week when the URA releases its full Q4 2016 private housing statistics.
For this year, property consultants polled by The Business Times mostly forecast sales of 8, 000 to 9, 000 private homes and 2, 300-3, 500 EC units in the primary market.
In terms of developers’ pricing strategy for 2017, affordability will rule the day. Developers will have to be mindful about pricing because it’s still a price-sensitive market on account of the property cooling measures and rising interest rate environment.
Unemployment is expected to rise in 2017 while GDP (Gross Domestic Product) will see muted growth.
The pricing strategy for developers remains pretty much a quantum play. Developers need to hit the sweet spot of S$1 million or below to achieve sales volumes. Given that land prices have risen in the past 12 months, the clear denominator to play around with would be the unit size – in terms of maintaining the sweet spot.
Although developers who paid for higher land prices last year are now stuck with less elbow room to price their plans attractively, engineering costs include fallen a result of the slow economy, which helps to alleviate cost pressures for developers.
A developer who declined to be named said that construction costs have eased about 10 per cent in the past six months as contractors are hungry for work. “So where the construction cost used to be S$300 per square foot (psf) on gross floor area half a year ago, it is now S$270 psf. ” He also noted that “projects in good locations and priced reasonably can still move”.
URA’s latest data – collated from licensed housing developers – shows that they sold 367 private homes in December 2016, less than half the 860 private homes in November 2016 but close to the 384 units in December 2015.
Despite the subdued December sales figure amid the year-end holiday time, the original number of individual homes distributed by creators in Q4 2016 was 2, 480 units — the strong quarterly sound level since Q2 2014.
In addition to the hunting for. 4 % increase for the of 2016, this echoes a medium strengthening well-known – operated by a assumption of the current market bottoming away, pent-up choosing, more genuine prices and acceptance of your cooling methods as a usu.
Last year, creators launched six, 853 individual homes — up 5. 3 % from 2015.
In the EC segment, 213 units had been sold by way of developers a few weeks back, down marginally from the 251 units on November, but the improvement in the 124 contraptions in 12 2015.
The 57. a few per cent soar in EC sales in 2009 was irrespective of a 18. 7 % contraction inside the number of fresh ECs released to two, 749 models. The pick-up in product sales was related to more practical pricing, that resulted in median prices of new ECs easing about five per cent among Q1 2015 and Q4 2016.
Demand for both fresh private homes and ECs is still there. Purchasers are coming round towards the view that there is limited advantage in awaiting further cost declines at new roll-outs, and those who are able to afford it might be inclined to enter the market.
Nevertheless, the number of models developers find a way to sell this season will be more a function of supply.
According to PERIOD Realty Network’s data, just two fresh EC initiatives totalling about 1, 000 units are actually slated just for launch the 2010 season – Qingjian Realty’s iNz Residence on Choa Chu Kang Road 5 and a project by way of Hoi Hup in Yio Chu Kang Road. Additionally , there are regarding 3, 000 unsold contraptions in EC projects which have been already that you can buy, ERA taken into consideration. The agency’s key full-time officer Eugene Lim says primary-market profits of 2, five-hundred to 3, 000 ECs the 2010 season.
Transaction sound level could be permanent due to the relatively benign apr environment, decent attributes of pipe projects and ample fluidity in the market.
We will see some supplemental demand out of foreign clients, particularly with the mainland China’s after Hk recently grown the brand, imprint duty price for nonresidents just who buy homes from 12-15 per cent to 30 percent.
Adapted out of: The Straits Times, teen January 2017