[B.3] More new home projects delayed to avoid landslide in prices

According to URA data, an annual average of 11,626 new condos/apartments will be available for immediate occupancy from next year up to 2013. These will be completed units that are ready for occupancy or tenancy. As for 2009, there will be about 10,000 new home units available for immediate occupancy or tenancy.

However, as the relief measures made under Budget 2009 allow housing developers to push back planned developments to later dates for a maximum of four calendar years, the potential supply may be cut back to lower than 10,000 new units a year. In fact, to avoid further shrinking of their profits, many like-minded developers have already shelved plans to redevelop en bloc sites which they bought during the 2006-2007 period. [This matter was reported in the January monthly report]

Housing developers are also pushing back construction schedule for new projects or redrawing building plans to resize the larger apartments into smaller ones. For example, Keppel Land has deferred construction of the 221-unit up-market Marina Bay Suites and the 56-unit Madison Residences in Bukit Timah; and CDL has deferred the SouthBank project in Beach Road.

Altogether, at least 82 planned housing projects have been indefinitely shelved.

[B.4] Boom or bane – Sub-sale deals will define this year’s market

While the housing developers have the government to thank for the much needed breathing space, some individual home owners may need to take losses by selling off the new units which they booked earlier under the Deferred Payment Scheme (DPS).

In fact, some new home units under construction in the prime districts have already been sub-sold at prices lower than the original launch prices while the global financial tsunami takes its toll against the rich world.

[B.4.1] Median sub-sale price fall

The median sub-sale price slipped to $880 psf in the fourth quarter (Q4) of 2008 – 7% lower than the prices in Q3 2008 and 27% lower than the same period last year. The drop in sub-sale prices has probably been caused by the price collapse of the high-end private home segment in 2008.

For example, the annual median sub-sale price of The Sail @ Marina Bay, the top sub-sale project in 2008 with 100 caveats lodged, has gone down to $1,550 psf. It is 22.1% lower than the median sub-sale price of 2007 and 9.4% when compared with Q4 2007.

A few prominent condo projects also suffered from lower median sub-sale prices, including Citylights in the Lavender area with 10% drop (to $1,036 psf), Varsity Park Condo in Clementi area with 12% drop (to $659 psf), and City Square Residences at Kitchener Road with 17% drop (to $835 psf).

[B.4.2] Sub-sale units selling at lower than launch prices

Based on caveats lodged, sub-sale prices at 11 developments that were launched between 2006 and 2008 have come down to below their launch levels, including the following projects: the 175-unit The Sixth Avenue Residences in Sixth Avenue; Duchess Residences in Bukit Timah, which was launched in 2007 with units costing more than $2,000 psf; Park Infinia at Wee Nam in Lincoln Road which was launched at around $1,500 to $1,600 psf.

A unit at The Orchard Residences was advertised for $2,600 psf while a unit at Ardmore II was put up for sale at $1,750 psf. The Orchard Residences and Ardmore II had sold for an average of $3,301 psf and $2,271 psf respectively at their launch.

Prepared by Sam Gian - Independent Real Estate Sales Trainer