One may wonder if the effects of the phenomenon will truly only be felt in a few years’ time.
Secondary market sales get a boost from displaced homeowners
Apparently not, as there are already immediate visible effects on the resale prices of properties in some districts. In district 10 and 15 for example, resale prices of existing condominiums have risen significantly. This is following the recent en bloc sale of the Amber Park and Royalville condominiums.
The trickle-down effect from the collective sales market has become more apparent especially as displaced owners of condominiums which have been sold en bloc rush to purchase replacement homes.
Though the new property market may benefit slightly from this move, many owners need to find a home sooner rather than later and cannot afford the wait required when purchasing units from new launches. They also prefer bigger-sized units typical of those built in the 1980s and 1990s. Newer units are usually sized considerably smaller.
Homeowners of properties nearby peg prices to bullish land bids
Announcements of en bloc sales are useful, in particular, the projected selling prices of then new launches. The market tends to anticipate the prices of new homes on the land sites and hence pricing competitively as such. Resale prices have been playing catchup, and very quickly too.
Amber Park and Royalville were sold at $1,515 psf ppr and $1,960 psf ppr respectively.
Since December last year, prices of 42 projects in district 10 have risen an average of 7%. In district 15, resale prices have risen 5% since October 2017.
Some buyers have also withdrawn their listings from the market as they await news of en bloc sales, hence limiting the pool of available units and theoretically pushing the resale prices up.