The government released eight residential sites, which can yield about 3,340 executive and private condominium homes, during the first three months of the year, as home buyers continued to snap up new homes and property developers clamoured for plots to replenish their shrinking landbanks.
Five of the sites, on which an estimated 2,175 housing units can be built, have been sold so far.
In contrast, the state did not launch or put any site up for sale in Q1 2009 amid a depressed property market.
“The government is responding to developers, who are short of land, as well as consumers, because of how the market has been behaving,” said Mr. Tan Tiong Cheng, chairman of Knight Frank.
Majority of the sites launched for sale through public tender in Q1 2010 are for mass market homes, as “mass market projects that have been launched have been very successful,” he added.
The government rolled out new supply, as the strong demand for new homes persisted. Analysts estimated that during the first three months, about 3,600 to 4,000 homes were sold – more than twice the 1,860 units sold in the last quarter of 2009.
The launch and sale momentum is expected to continue in the second quarter. Property consultancy firm CBRE expects developers to sell about 3,000 new homes this quarter and said that the government land sales programme will be a “viable source” for property developers to replenish their stocks.
Analysts welcome the fact that the spotlight has shifted to launches and landbanking instead of the policy tightening talk.
Last week’s triggering of two sites on the reserve list of the government – a 3.02-ha residential site at Hougang Avenue 2 and a 1.9-ha white site in Jurong Lake District – show that developers are taking the initiative and strong appetite for land still remains, said Adrian Chua of DBS Vickers.
Six tenders for executive condo and private residential sites launched for sale by the government – including three for sites that were launched in the first quarter – are expected to close in April and May.
“The strong sale calendar is expected to be positive for developers looking for landbanks, particularly those that are active in the mass-market segment,” said Mr. Chua.
Analysts reckon that with the considerable supply in the pipeline, prices of private homes are expected to increase at a gradual pace, held in check by the government measures and buyers’ financial prudence.
According to Foo Sze Ming of OCBC Investment Research, the market seems to be stabilising. Based on the official price index of URA for private homes, prices rose 5.1 percent in Q1 2010 – slower than the 7.4 percent clip in Q4 2009 and 15.8 percent rate in Q3 2009.
In the HDB resale market, prices gained 2.7 percent quarter-on-quarter in Q1 2010 – a slower rate of increase, compared to 3.9 percent in Q4 2009 and 3.6 percent in Q3.
“Recent government measures were aimed at achieving stability in the property market, and with the latest data showing signs of stabilisation, this could ease concerns of further government intervention in the property market and drive the re-rating of Singapore property developers,” said Mr. Foo.