MARKET observers have observed a rise in new sales at several private home developments in the last two weeks, prior to developers implementing their anticipated price increases.
Several developers refused to comment on the pricing hikes when contacted by The Business Times (BT), while others did not reply as of press time.
Rising land bids, a limited supply of private houses, and strong demand in the Pasir Ris 8 (PR8) launch on July 24-25 were all factors contributing to increased unit prices.
“We believe that as many as 20 projects have modified their pricing by between 1 and 3%, mostly for projects situated outside of the key areas,” Showsuite Consultancy CEO Karamjit Singh said.
In contrast, Mr Singh observed that several developments in the prime central area had their prices lowered to meet demand. “Overall, the market is adapting to changes in purchasing habits, affordability, and supply statistics.”
Steven Tan, CEO of OrangeTee & Tie, has seen pricing increases ranging from 1% to 4%, which are typically applied for certain unit kinds and stacks that are advancing faster, rather than a whole project.
He observed that there was a “slight uptick” in transaction volumes at some developments in the days leading up to the planned price adjustments, as some purchasers responded to the news and sought to secure their units at the reduced rates.
“We’ll probably have to wait another week or two to see how people react to the pricing changes,” Mr Tan said.
“There was an uptick in new house sales in the market last week, with close to 500 units sold,” Huttons Asia CEO Mark Yip told BT.
More over half of the transactions took place outside of the Central Region (OCR). Due to the high number of flats that have passed the five-year Minimum Occupancy Period as well as the robust HDB resale market, this was driven by HDB upgraders, he said. “This upgrader demand will boost market transactions in H2 2021 and 2022,” Mr Yip said.
According to transactions registered in the Urban Redevelopment Authority’s Realis database, many projects saw slightly higher transaction volumes during the week of July 18-25, compared to the first half of the month.
For example, between July 18 and 25, purchasers scooped up 45 apartments at the 680-unit Sengkang Grand Residences for an average of S$1,713 per square foot (psf). 38 of these transactions occurred on the same weekend as PR8’s debut. Sengkang Grand, on the other hand, only moved 24 units in the first half of July. Prices at the 99-year leasehold development by CapitaLand and City Developments Limited were anticipated to rise by 1 to 2.5 percent on or around July 31.
Normanton Park at Kingsford Huray Development witnessed 46 transactions in the week of July 18-25, with an average price of S$1,801 psf, compared to 42 deals in the week of July 1-17. In late July, the developer increased the pricing.
Meanwhile, between July 18 and 25, Ki Residences At Brookvale, built by Hoi Hup Realty and Sunway Development, sold 24 apartments at an average price of S$1,851 psf. According to BT, the costs for the 660-unit project increased by 3 to 5% early last week. On July 1-17, 22 units were sold.
During the July 18-25 period, Sim Lian Group sold 21 apartments at an average price of S$1,456 per square foot at Treasure At Tampines. Ten of these were transacted during PR8’s debut weekend. According to URA Realis, the project had 20 transactions in the first 17 days of the month. Price increases, according to agents, will go into effect on August 2.
Other developments where prices were anticipated to rise were Parc Clematis, Kopar At Newton, Parc Komo, Meyer Mansion, and Fourth Avenue Residences, as previously reported by BT.
Despite the fact that the PR8’s launch performance increased developers’ confidence, several were already considering price increases due to dwindling availability.
Mr Singh of Showsuite said, “As developers sell down their inventory and HDB prices firm up, price increases for projects in mass-market areas were already on the cards even before PR8.”
Multiple price increases at PR8 and recent land tender results “gave confirmation and constituted the trigger,” according to Mr Singh.
Similarly, Mr Tan from OrangeTee & Tie said that when sales at several projects reached 50% or even 70%, developers began to consider refilling their land banks and faced the prospect of increased land prices.
Alan Cheong, executive director of research and consulting at Savills Singapore, said that developers are also experiencing financial constraints as a result of supply-chain delays caused by the Covid-19 epidemic, in addition to hefty commission payments to agents. As a result, some of them were forced to pass on such expenses to consumers.
Given the high demand in the face of a series of price hikes at PR8, developers of other projects felt this would be a good moment to pass on their expenses by increasing prices, “knowing full well that following PR8, much of their unsold inventories suddenly appears reasonably priced,” Mr Cheong told BT.
Although consumers may still take minor price increases, they are price-sensitive and may not accept increases of more than 5%, according to experts.
“It’s always tough to go into the depths of family wealth, but it seems to be considerably deeper than previously believed,” Mr Cheong told BT.
“We now understand that sluggish sales do not always indicate a lack of affordability, but rather a reluctance to purchase until a motive emerges. PR8 sparked that drive “He continued.
Meanwhile, Mr Tan said that the PR8 condominium would be part of an integrated development that will include a mall and be situated near an MRT station. Projects with such characteristics often demand higher price premiums.
As a result, the degree to which purchasers can tolerate price increases varies not only on the general region, but also on the project type and the amount of pent-up demand in the area, Mr Tan said.