Friday, February 8, 2013

Homing in on property price cuts

Earlier buyers may feel they lost out; others accept market conditions change

The Straits Times - February 8, 2013

DEVELOPERS who have been cutting prices following the new cooling measures risk angering buyers who bought at the earlier levels, say experts.

But developers claim that the recent discounting does not necessarily disadvantage early buyers.

Property experts say some buyers who have just shelled out on a new home will inevitably be unhappy when they see units at the same development suddenly going cheaper.

An industry player, who declined to be named, said price cuts are a sensitive issue and unhappiness with the developer can be expected with some buyers "banging tables".

"But you can't expect the best deal all the time, especially if the market has turned... When developers raise prices after a launch, they don't ask the earlier buyers to cough up more money instead," he said.

Some developers have cut prices amid concerns of a deluge of housing supply in the pipeline, coupled with the risk of the market slowing on the back of the tough new curbs.

CapitaLand projects such as 1,040-unit The Interlace at Alexandra Road have slashed prices by an additional 10 per cent, while 1,715-unit d'Leedon in the former Farrer Court estate offered discounts of up to 15 per cent for some units.

Far East Organization also offered further discounts of up to 5 per cent at eCO in Bedok and Seastrand in Pasir Ris recently, after the seventh round of curbs kicked in on Jan 12.

When asked if earlier buyers had expressed unhappiness at the discounts, A CapitaLand spokesman told The Straits Times: "Our buyers, in general, are aware that we consider the prevailing market conditions and offerings at other developments within the same area when coming up with promotional schemes.

"In fact, some buyers who purchased units earlier enjoyed more attractive pricing despite the current promotional discounts."

He pointed out that these buyers also paid lower stamp duties and had higher loan quantums so once these factors are taken into consideration, it would not be meaningful to compare prices of units bought at different times.

Another developer, who declined to be named, said the firm explains to earlier buyers that the price premium they might have paid is due to the choicer units being offered to them at the earlier launch date.

Even with discounts, prices rarely fall below the launch level, he added, as prices are typically inched up gradually as the project sells more units.

Price cutting is certainly not new.

Melrose Park, a 999-year leasehold project in the River Valley area, for instance, cut prices by as much as 40 per cent during the Asian financial crisis as the market bottomed out.

Mr Desmond Tan, who bought a one-plus-study unit for about $1 million at d'Leedon in early 2011, said the discounts on offer now are fair from the point of view of the developer.

"They want to clear more stock before more units enter the market. Of course, I would have liked to save some money but in life, you can't always get the best deal," he said.

"I'm resigned to the contract that I've signed and realistic about it."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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