Expect aggressive property launches

PHOTO: Expect aggressive property launches

SINGAPORE - Developers may adopt more aggressive strategies when they launch projects over the next six months, although prices are unlikely to fall significantly, said property consultancy Colliers International on Wednesday.

It noted in a new report that builders that have paid for costly land may be less likely to drop prices due to low profit margins.

They might be better placed to launch sooner rather than later given the latest changes in the market. That in turn could help prop up home demand, said the report.

It also noted that sales began to slow in the second quarter as January's cooling measures worked their way through the market, and buyers became more concerned about the fragile economic outlook.

Monthly figures from the Urban Redevelopment Authority show that 4,447 units were launched in the three months to June 30, down 19.8 per cent from the first quarter, while sales fell 18 per cent to 4,401 units.

"Buying sentiments were also partly affected by the stock market sell-down across the May to June period, exacerbated by fears that the US Federal Reserve would cut back on monetary stimulus amid ongoing global uncertainties," said Ms Chia Siew Chuin, Colliers' director of research and advisory, and the report's author.

Despite this, the private residential property price index reached yet another new peak in the second quarter, rising 0.8 per cent over the previous three months.

Launches in the period picked up at the end of June, with more large-scale projects coming on to the market.

Major mass-market developments released in June included the 738-unit J Gateway and the 616-unit Jewel@Buangkok.

Sentiment in the private residential property market may take a relatively more cautious turn in the months ahead on the back of new debt servicing rules introduced last month, said Ms Chia.

The new rules, which took effect on June 29, impose a Total Debt Servicing Ratio framework on all property loans granted by financial institutions to individuals.

All of a borrower's debt obligations - including loans for cars, renovations and credit cards - must now be taken into consideration when assessing a mortgage application.

Separately, new housing demand may also weaken on the back of potential interest rate hikes due to the looming cutbacks in monetary stimulus by the Federal Reserve in the US, said Ms Chia in the report.

New-home sales, which stood at 9,770 units at the middle of the year, could come in at between 15,000 and 17,000 units for the whole year.

This is down from the initial forecast of 16,000 to 18,000 units, said Ms Chia.


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