By Reico Wong
SINGAPORE - The high-end property market in Singapore may have reached a peak, with prices of luxury homes - in districts one, two, four, nine, 10 and 11, and priced around $2,000 per sq ft - down by about 5 per cent since the start of the year, due to the euro- zone debt crisis and a surge in home completions here.
Real-estate firm Savills Singapore said current luxury-home prices have also fallen between 10 and 30 per cent from their peak during the 2007 property boom.
Savills said yesterday that bargain hunters hoping to snag a good buy may find some ripe pickings, with property launches back in full swing after a lull last year and the increased number of unsold units likely to exert downward pressure on prices.
Mr Alan Chong, head of research at Savills, told my paper: "With supply chasing demand, property prices for luxury homes could see a drop of another 5 per cent within the next six months, although developers of new project launches will have more pricing power compared to those of...units already launched, or existing ones in the market which are being flipped."
Eight major projects, yielding about 1,200 new units, have been launched since the start of the year.
These include the 510-unit luxury apart- ment V on Shenton, located in the Central Business District; the 180-unit freehold high-rise 26 Newton; and the 132-unit mixed development Eon Shenton.
While the take-up rate for some of these projects was relatively healthy, the increase in supply - amid a market already hit by lacklustre demand - means increased competition among newly completed luxury developments, many of which still have a sizeable amount of units unsold, according to Savills.
The total number of unsold luxury homes in prime districts stands at about 12,855 units. Of this, 12,124 units have yet to be completed, but half of them are ready to be launched. At least another seven major projects are slated to be launched in the next six months.
One factor that buyers should bear in mind is the two-year post-completion deadline for developments: Developers would have to pay an additional charge - a percentage of their land price - if they were to extend their sale period beyond those two years, pro-rated according to the number of units they are left with.
This could motivate developers, especially those with shallow pockets, to mark down prices of the remaining units.
"Together with a looming pipeline supply of 19,056 units to be completed in the next few years, any price cuts could trigger a resumption in demand, possibly resulting in sales hitting 1,000 units per quarter until the end of the year," said Savills.
Get my paper for more stories.