Prices of private homes have just started to pick up speed, which in turn has boosted developers’ confidence. The latest string of collective sales is just one happy outcome of the positive sentiments.
Collective sales may not translate to higher home prices
There has been concerns about rising home prices in future new launches, especially with the sheer number of collective sales closed these past 2 years. About 2,700 private homes have been sold this year. Compared to the 600 last year, it is about 4 times more.
National Development Minister Mr. Lawrence Wong has said that “the government will continue to monitor overall market trends closely and take appropriate actions to maintain a stable and sustainable property market”.
He also said that the recent spate of collective sales was partly due to developers’ need to replenish land banks. Another reason could be the ripple effect from the success of collective sales in 2016. Ageing residential estates were encouraged by the market’s response, to make renewed attempts at selling their properties en bloc.
Developers are likely to price new launches reasonably
The government has also restricted the sales of sites from their Government Land Sales (GLS) programme last year. They will take into consideration factors such as population and income growth, property market conditions and supply of new units before deciding whether to ramp up the supply of land banks.
Currently, there is an additional buyers’ stamp duty (ABSD) which is imposed on developers who fail to build and sell their new units within 5 years of a site being awarded. That will no doubt put pressure on developers and hence keep a loose boundary on developers’ pricing of newly launched units.