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Home prices cannot fall too deeply without hurting quality, says Redas

SINGAPORE — Home prices cannot fall too deeply without compromising the development quality of properties here as well as the operations of developers, the Real Estate Developers’ Association of Singapore (REDAS) warned today (Nov 5).

REDAS president Augustine Tan said developers continued to face pressure from an increase in supply in the market. TODAY file photo

REDAS president Augustine Tan said developers continued to face pressure from an increase in supply in the market. TODAY file photo

SINGAPORE — Home prices cannot fall too deeply without compromising the development quality of properties here as well as the operations of developers, the Real Estate Developers’ Association of Singapore (REDAS) warned today (Nov 5).

REDAS president Augustine Tan said developers have had to grapple with rising land and construction costs as a result of improved quality and higher specifications of finishes and fittings. Besides that, operational costs have also increased as developers face higher regulatory fees for plan submission and sustainability initiatives such as attaining Green Mark certification. Restrictions on foreign labour and site operation hours have also added to the monetary burden.

“Prices cannot drop too deeply without affecting the quality of our products and operational obligations. Having made significant progress in the standard of our built environment, it is no longer possible to look back. We have to progress,” Mr Tan said at the association’s 56th anniversary dinner.

Stopping short of calling for cooling measures to be re-examined as he did at REDAS’ Mid-Autumn Festival lunch, Mr Tan added that developers continued to face pressure from an increase in supply in the market.

Citing a recent survey conducted by the association with its members that launched a total of 14 non-landed projects from 2013 to 2015, he said respondents have had to reduce prices by up to 11 per cent to cope with the current soft market. Some projects have had two price cuts since 2013.

“On many occasions, we have raised our concern on the widening supply-demand imbalance and a higher interest rate environment around the corner,” said Mr Tan, who is the executive director for property sales at Far East Organisation.

“Adding to this pressure, some 3,000 units from projects from the Government Land Sales programme 2012 remain unsold to date. Developers will have to sell out 100 per cent of the units in these projects by 2017 in order to qualify for the remission of the Additional Buyers’ Stamp Duty on the land cost,” he added.

Private home prices fell for an eight consecutive quarter in the July-to-September period — the longest losing streak in 13 years. This brings the total price decline to 8 per cent since the peak in the third quarter of 2013, data from the Urban Redevelopment Authority showed. Property analysts had said that the losing streak will likely continue as the Government has indicated repeatedly that the cooling measures are unlikely to be lifted anytime soon.

Finance Minister Heng Swee Keat, the guest-of-honour at the REDAS dinner yesterday, said in a speech that the real estate market here is managed through calibrating land supply based on fundamental demographic and economic factors.

And when necessary, the Government will introduce prudential and fiscal measures to smooth out cycles and promote market 
stability.

“In Singapore, we have from time to time experienced swings in the property market, but by and large, these have not led to volatility in the broader economy,” he said.

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