The impact of the government’s latest loan policies was evident in last week’s launches of The Skywoods (pictured) and The Glades, as sales were stalled following the first day of booking, according to Religare.
Keppel Land’s 726-unit The Glades sold only 80 units, with average prices ranging between S$1,450 psf and S$1,500 psf. This compares with the nearby Urban Vista condo, which sold around 220 units in March at an average price of about S$1,500 psf.
Over at Skywoods, only 45 of the first 150 at an average price of S$1,250 psf were sold.
“We didn’t sell as much as we wanted,” said TA Corporation CEO Neo Tiam Boon, adding that the total debt servicing ration (TDSR) framework has affected sales.
“Even though we had a pretty big turnout of visitors at our showflat, many said they needed to talk to banks. Nowadays, qualifying for a loan is challenging and in addition, some buyers may not be familiar with the increased number of documents they have to submit. So we are giving potential buyers a bit more time to secure funding.”
Meanwhile, Alan Cheong, Research Head at Savills Singapore, noted that “the authorities may have set the TDSR bar too high – at 60 percent. If you set the dyke too high, hardly any liquidity flows through.”
Religare also noted that developers are currently faced with lower prices, slower sales but high land costs.
“We’ve pointed out earlier than land costs have continued to remain elevated due to heightened competition, while at the same time selling prices have been lagging the rise in land costs, thus negatively impacting developer margins,” it said.
“With vacancy rates set to rise as over 100,000 units are due for completion over 2H2013-2017, we expect vacancy rates to rise to eight to nine percent, rents and hence, prices could correct, ultimately leading to a fall in new home sales volumes.”
Additionally, prices are expected to correct by five to 10 percent over 2H2013 to 2014.
Nikki De Guzman, Junior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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