Despite measures that were announced on Monday by the government to cool down an overheating market on private housing, a number of developers still intend to proceed with plans to start on their projects.
According to a CapitaLand spokeswoman, the CapitaLand Residential began to preview yesterday at its office the site of the Interlace condo, which was bought from Gillman Heights’ former owners for a 99-year leasehold project. The price range of the units is from $850 up to $1,150 per sq. ft (psf).
This weekend, GuocoLand also proceeded with heir preview for the freehold Elliot project in the East Coast at an average price of almost $950 psf. The starting price of a usual three-bedroom apartment will be around $1.2 million. The five-storey condo with 119 units is comprised of eight blocks.
City Developments is also rushing preparations for the possibility of a preview for its project, Hundred Trees condo, located in the West Coast area this coming weekend.
The cooling measures of the government include the restarting of the confirmed list of land sales in the first half of the year 2010 and the termination of the interest absorption scheme (IAS).
Tan Tiong Cheng, Knight Frank chairman, said, “Knowing that the government is coming up with more land, developers who have even marginally profitable projects may want to clear the decks and launch their projects this year”.
One developer has said: “Most of us feel the impact on demand from the removal of IAS will be more psychological than real as only a minority of buyers have been opting for it in recent months in projects where we charge a price premium for the scheme”.
“Yes, buyers may now take a longer time to make a decision but they will bite if they like the product and if it’s priced right”, continued the developer.
In agreement, Mr. Tan stated, “Ultimately if the intention is to sell, they cannot fight the market impression that there must be a price adjustment”.
Even though IAS removal sucked out a number of speculative demands from the property market, many developers are still confident of all the factors in the market as well as its appeal to investors, with the present low-interest rate of the location.
Analysts also have an agreement regarding stock-broking houses that the said measures will not disrupt in the recovery of the property market. In a report, Citigroup noted, “(The) measures may dampen speculative sentiment but may not stop genuine private home demand if the trajectory of economic recovery continues.”
Yesterday, analysts also came up with an observation that while the price increase of private homes seen during the past months could lead to a standstill, several developers were unlikely to cut-down their prices with a large amount either.
Adrian Chua, DBS Vickers analyst, noted, “We believe that developers, buffeted by strong start-of-year sales, are unlikely to cut prices aggressively”.
“The key impact would be a slowdown in sales as speculative buying gets flushed out of the market”, Chua added.