Friday, February 11, 2011

Cooling measures hit home sales

(SINGAPORE) Developers here admit that the latest measures to cool the property market have led to them selling fewer homes. But they were coy when asked if they were cutting prices and delaying launches.

Market sources have told BT that developers lowered target prices at some recent launches. Some are also offering additional sweeteners such as discounts and vouchers.

The number of new homes sold by developers is also reported to have fallen since Jan 13, when the government said it will raise the seller's stamp duty for private homes to up to 16 per cent and further slash the loan-to-value (LTV) limit on housing loans to 60 per cent for buyers with outstanding housing loans.

Developers constantly review their launch and marketing strategies, said Wong Heang Fine, the new president of the Real Estate Developers Association of Singapore (Redas).

'It is not unusual for developers to change their marketing plans in response to the market. So I don't think we see any unusual things happening in the market just because of the measures,' he said.

Mr Wong, who is also the chief executive of CapitaLand's Singapore residential arm, was speaking to reporters after Redas' annual Spring Festival luncheon yesterday.

Lim Ee Seng, CEO of Frasers Centrepoint and Redas first vice-president, added that market-wide price cuts, such as those that happened during previous recessions, have 'not taken place yet'.

But at least one developer admitted that prices are set to fall. The head of a property group, who declined to be named, expects a correction of about 5 to 10 per cent for the rest of the year in private home prices as well as land prices.

He added: 'Some developers may see this as an opportunity to pick up some development sites at more reasonable price levels. This is actually a healthy situation going forward. If not for the Jan 13 measures, one would have had to continue bidding for land at forward prices.'

The next few Government Land Sale tender closings will be closely watched, the developer added.

In addition to price cuts at new launches, BT understands that for some projects that were launched before the cooling measures were announced, developers are expected to keep prices steady while rolling out units in subsequent phases.

Typically, in a rising market, developers launch units in subsequent phases at higher prices.

Mr Wong also delivered his maiden speech as Redas president at the start of yesterday's luncheon.

He said the property market is stabilising after the latest round of cooling measures by the government, but added: 'I hope that any further measures by the Singapore government would only be made after considering all options.'

This drew much laughter and cheers from the audience, which included National Development Minister Mah Bow Tan.

Mr Wong also said that this year, Redas plans to enhance its partnership with all the stakeholders in the real estate industry, including the government, contractors, consultants, suppliers, unions and workers.

The industry body will also boost efforts to build green and sustainable developments and also look at improving productivity across the real estate industry, Mr Wong said.

He also revealed that Redas plans to form specific focus groups to 'look into the issues facing the industry today'.

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