THE upgrader segment of the private housing market is likely to see more subdued price increases going ahead, Wing Tai chairman Cheng Wai Keung said yesterday.
This is because the upcycle for this segment is at a mature stage and there is a higher risk of impact from policy changes to public housing, he continued.
There is, instead, more room for price growth in the high-end market - driven by wealth generation, liquidity, limited supply, and given that prices generally are still around their 2007 levels.
Giving his take during Wing Tai's full-year results briefing, Mr Cheng said of prospects for the upgrader or mass-market segment: 'I cannot say this is the peak of the market but the probability that it will remain high is shorter by the day. Everything has a cycle, and if you continue to be in the upcycle, the probability that it will turn is so much closer. I cannot predict when it is going to be coming. But all I can say is the longer you stay at this level, the higher the probability that it will turn.'
He posed another question: 'If developers are not seeing that the market is toppish, why are all developers now pushing out their (upgrader) projects as quickly as possible?'
Besides the maturity of the upcycle in this segment, Mr Cheng notes that the upgrader market is more affected by the Housing & Development Board market, which may potentially see excess supply based on the step-up in launch supply of new HDB flats this year and next.
Analysts have discussed at length the likelihood of a siphoning-off in demand from the entry-level private condo market to the public housing market.
Wing Tai deputy chairman Edmund Cheng also told BT that winning land bids for mass-market private housing sites at state tenders are too high, leaving little profit margin for the developers.
He expects bids to come down in the near future, describing the current phase as the tail end of strong demand for homes in this segment. 'The last one and a half years, two years, you can see there's so much demand ... stronger than the supply side. It is coming to a tail end. So it's important that government must balance it to ensure that there is no oversupply ... (it) does not flood the market (with sites).'
Wing Tai will be more circumspect when bidding at land tenders. As Mr Cheng Wai Keung said at yesterday's analyst and media briefing: 'I am not going to compete with 15 developers for a piece of land. Just look at the lowest and highest (bids); the range is so wide; someone is making a mistake,' he added.
He said: 'In a property cycle, in the early stage, you can get any land you want. But when you reach the maturity stage of the cycle, you have to be more selective whether you're able to see value.
'I believe that for the upgrader market, increase in price will be a bit more subdued so I think that the upside would be limited.
'For the high end I don't see that there is any adjustment. I think the low end may have a higher probability of performing not as (well) as the high end.'
For now, Wing Tai still has stock of high-end residential projects in Singapore which it will continue to sell - including two new projects along posh Ardmore Park, L'VIV in Newton which is under construction, the completed Helios Residences at Cairnhill Circle, and Belle Vue Residences at Oxley Walk.
Mr Cheng also pointed out that Wing Tai's gearing has been declining steadily. 'We are most well prepared to take bold action.'
Overseas, the group will continue to invest in Malaysia. 'We believe land there is value for money; risks are not very high. And we will continue looking at China.'