Sunday, July 29, 2012

Developers lowering launch prices: URA data


Straits Times: Sat, Jul 28

DEVELOPERS appear to be lowering the prices of their launches, with fresh figures showing prices for uncompleted homes falling slightly in the second quarter.

Data from the Urban Redevelopment Authority showed that prices of uncompleted non-landed homes dipped 0.9 per cent in the three months to June - the first fall since mid-2009.

Prices for completed private homes, however, climbed 2.3 per cent.

Experts say the fall could be explained by the fact that some launches in the period were in less desirable locations, including those further from MRT stations and amenities, thus fetching lower prices.

Another factor they cited is that some of the new launches were in estates such as Punggol and Pasir Ris, where many projects had already been pushed out. This led to stiff competition and more conservative pricing.

Mr Png Poh Soon, head of research at Knight Frank Singapore, said developers are not as aggressive as before in their pricing.

They are more willing to launch new projects at lower prices, and then gradually move prices up if buyer response is good, rather than launch at high prices, which might result in them getting stuck with unsold units.

'Uncompleted home prices might continue to ease marginally, but it is unlikely to fall significantly unless there are some negative developments in the macroeconomy that bring about concern about a recession,' said Mr Png.

Colliers International research and advisory consultant Tay Huey Ying pointed out that prices for homes in the city centre fell 0.6 per cent. This is at a steeper rate than the 0.2 per cent slide in the first quarter.

'This could be tell-tale signs of deepening fault lines in the high-end market, where some developers might be beginning to succumb to the pressure of persistent weak demand by reducing price in order to move sales,' she said.

Mr Png said that as high-end sales volumes have been slow, developers are often willing to negotiate the selling price with genuine buyers.

Experts add that mass market home buyers are price sensitive, and projects priced less than $1,000 per sq ft (psf) have been seeing higher take-up rates.

For instance, recent mass market launches such as Wee Hur Holdings' 618-unit Parc Centros in Punggol, priced at an average of $950 psf, enjoyed healthy sales.

Koh Brothers' 486-unit Parc Olympia on Flora Drive in the Upper Changi Road vicinity, priced at an average of $820 psf at its launch earlier this month, also saw at least 170 units snapped up.

However, potential home buyer J.J. Lim, who is in her 40s and has been looking for a home in the city fringe area for the past year, said she has not seen prices fall as yet.

'A 0.9 per cent fall is not discernible. Homes are still expensive. Maybe if it is a 9 per cent drop, I will be able to tell... But I am quite optimistic that prices will come down eventually,' she said.

  
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