Although there are valid reasons for developers not to make their home prices lower, such as the fall of valuations and price war, there are also irresistible reasons for a developer to lower their home prices.
First appealing reason to lower home prices is that lower prices will attract buyers and will bring them into the market. Since the start of the recession, when home prices started shooting upwards, many buyers have just been waiting on the sidelines until home prices become reachable again.
Some projects like Evania, a 35-unit condo located in Upper Paya Lebar, has tried this strategy. Evania sold 15 units in November after dropping its price from about $900 per square foot (psf) to just above $600 psf.
Another reason to reduce home prices is that prices are going to decline in any case, regardless of price war. There is no need for steep price drop, just the reasonable and realistic prices to lure buyers back into the market.
Even after City Developments set an average price of $650 psf on its mass market condominium Livia in Pasir Ris, the condominium’s launching was still very successful, and the price drop did not cause City Developments a downward spiral.
Some measures by industrial players and developers, such as renovation allowances offer and vouchers for electrical equipments, might make the buying environment more favorable, but a discount is more persuasive in attracting buyers.