Aerial view of high-rise apartment buildings in Singapore.
Real Estate Developers’ Association of Singapore (Redas) President Augustine Tan believes weak market sentiment continues to weigh down on Singapore’s property market, reported The Straits Times.
He noted that since the government rolled out a slew of property cooling measures from 2009, demand for private homes has dropped significantly on the back of large supply.
In fact, 57,597 new private units and 12,077 executive condominiums (ECs) are in the pipeline as at May 2016. While only 15,000 units remain unsold, the supply is still significant considering the prevailing weak demand, Tan said at a property market seminar on Tuesday (12 July).
“With the cooling measures still in force, the real estate market continues to face disruptive forces on multiple fronts – from weak demand and hefty supply to manpower constraints and challenging business environment,” said Tan, who also serves as Executive Director of Property Sales at Far East Organization.
He revealed that developers have slashed prices by around five to 25 percent in some projects to move units. Sales at new property launches have also petered out following the initial launch.
“Industry experts estimate full year sales to come in at between 7,500 and 8,000 units this year, a level well below what would sustain a healthy property market,” said Tan.
Pressures continue to loom for projects affected by the Additional Buyer’s Stamp Duty (ABSD) and the Qualifying Certificate (QC) rules.
He expects the QC rules to affect about 1,100 to 1,200 unsold units from 17 developments by end-2016, while around 5,300 unsold units in 47 projects (excluding ECs) will be affected by the ABSD remission clawback from end 2016 to 2018.
Initially introduced in December 2011, the ABSD rules require developers to build and sell all units within a project in five years from the site’s contract purchase date or pay a 10 percent levy, which was raised to 15 percent for sites acquired from 12 January 2013. The QC rules, on the other hand, require foreign developers to sell all units at their projects within two years from obtaining a Temporary Occupation Permit (TOP). Failure to do so will see developers paying extension charges that are pro-rated to the proportion of unsold units.
According to Tan, property markets are driven by both market sentiment and economic fundamentals. Market conditions have become more fast-moving while property cycles are now shorter. As such, he believes that keeping abreast of the latest development trends and market events is critical to retain a competitive real estate advantage.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
