If 2017 were the year for developers to fill up their land coffers, then 2018 seems like the year to see these investments come to fruition. There is likely to be a healthy amount of jousting for sales in upcoming launches.
Property market expected to do well in 3-year upswing
The line of properties receiving en bloc attention may diminish slightly as the year goes on. But as bidding wars increase, the developers who had paid lower prices earlier on in the race will benefit. Taking recent land prices into consideration, analysts are estimating that property prices will have to rise 6% to 13% in the next few years.
There is naturally some uncertainty about how high prices can go before consumers stop biting. Some analysts have estimated that prices of new projects will have to be approximately 40% higher than similar properties in the vicinity for the developments to break even.
Property analysts are however hopeful for a 3-year upswing as the market continues to make a strong showing.
3% to 7% rise in property prices this year
The euphoria of last year’s rapid sales may or may not carry into this year. But it will be what comes after that determines the success of these new developments. Property cooling measures previously implemented by the government are still in place, interest rates may rise soon and banks are placing limits on loan packages. All these factors may put pressure on the market.
However, there is a possibility that buyers will continue to accept the higher selling prices. In a few launches last year, the take-up of units had remained strong despite the higher prices. The Additional Buyers’ Stamp Duty (ABSD) will also prompt developers to push and sell new units as they are bound by a 5-year timeline to sell and complete project.