Developers cut prices after latest property curbs

SINGAPORE — In a bid to attract more buyers, some property developers are lowering the prices of their residential projects by about 5 to 10 per cent after the latest round of cooling measures took effect on July 6.

Daintree Residence, a 99-year leasehold condominium which opened for sale on July 28, was selling at an average price of S$1,710 psf, which is 5 per cent lower than the earlier announced price of S$1,800 psf.

Mr Neo Keng Hoe, general manager of its developer SP Setia, said that a decision was made to reduce the price on the day of the launch, based on market conditions after the cooling measures. Last month, the Government raised the Additional Buyer's Stamp Duty (ABSD) and tightened loan-to-value limits on residential property purchases, which affect housing loans granted by financial institutions.

Daintree Residence, located along Toh Tuck Avenue in Upper Bukit Timah, is the first development to launch after the cooling measures were rolled out.

At Potong Pasir, The Tre Ver — another new development launched on Aug 4 by UOL and United Industrial Corporation — sold at an average transacted price of S$1,550 psf.

Park Colonial, which is located in the same district and put up for sale just before the cooling measures kicked in, was selling at an average of S$1,750 psf — indicating that The Tre Ver's launch prices are about 10 per cent less than its neighbouring project.

Email messages seen by TODAY revealed that developments launched before the cooling measures were making price cuts to boost sales.

Affinity @ Serangoon's developer Oxley Holdings was offering a 5 per cent discount for its one-bedroom units, and a 7 per cent discount for its two-bedroom ones. The discounts were limited to just the next 20 units sold from July 12 at the project in Yio Chu Kang.

Guocoland was similarly offering a 5 per cent discount on July 12 for selected units at Martin Modern condominium in River Valley, which was launched slightly more than a year ago.

Another email, sent on July 13, advertised that selected units at Margaret Ville condominium in Queenstown are going at a S$20,000 discount. The 99-year leasehold project, built by MCL Land, was transacting at S$1,880 psf during its launch weekend between June 2 and 3. The units were selling for an average of about S$1.2 million then.

CUSHIONING IMPACT

Property analysts contacted by TODAY generally agreed that developers have dropped prices by about 5 to 10 per cent, mainly to cover for the increase in costs for buyers looking to get a new apartment.

Dr Tan Tee Khoon, executive director of real estate consultancy Knight Frank, said: "The price sweeteners are there to cushion the immediate impact of cooling measures and create an urgency to buy."

Singapore citizens and permanent residents buying their second property and beyond, as well as foreigners buying any property have to pay higher ABSD with the latest property curbs.

The discounts offered by developers follow a similar pattern of price adjustments made when the property market was hit by earlier cooling measures, analysts said.

Developers would generally mark down prices along the same range as the increase in ABSD rate imposed by the Government.

PRICES UNLIKELY TO GO DOWN FURTHER

However, not all developers would see the need to bring down their prices yet, as pointed out by Mr Lee Sze Teck, head of research at property firm Huttons Asia.

Some of them have managed to sell units without discounts due to the project's location, architectural design and layout.

Both Mr Lee and Dr Tan believe that prices will not fall further in the coming months.

Mr Lee said that there is little room for developers to move prices since projects overheads are locked in, such as land and construction costs. Dr Tan noted that the land acquired by the developers were also transacted at "unprecedented prices" and that they may even stop the discounts going forward.

International Property Advisor's chief executive officer Ku Swee Yong commented that it is difficult to predict how developers will adjust their prices given that several have postponed their launches.

Developers may try to dangle non-price-related carrots such as emphasising the quality of their construction materials, though Mr Ku believes that this may not be enough to sway buyers.

"(They) have to deal with it mainly through pricing," he added.

Even with certain players pushing discounts, Mr Alan Cheong, the senior director of research and consultancy at real estate company Savills, believes that the new launch prices of projects are still above the prices of private residential units sold before the latest round of cooling measures.

That is because some developers may have marketed their projects at prices higher than the valuers' before the property curbs.

Last month, the Urban Redevelopment Authority reported that prices of private homes went up by 3.4 per cent quarter-on-quarter from April to June.

Mr Cheong expects property prices in the third quarter to be higher than the second quarter due to "transitioning effects".

Prices would probably only turn flat in the fourth quarter of this year, he added.

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