Prices Unlikely To Fall Yet Even If Launches Have Been Stalled

Source : The Sunday Times, Feb 3, 2008

Larger developers can still hold out, but some may be more open to slightly lower offers

SENTIMENT in the property market is lacklustre, showflats are quiet and developers are delaying launches. So there is a chance that prices will head down, right?

Wrong. While stock market volatility and fears of a United States recession have sent many property buyers to the sidelines, developers have not lost their nerve yet.

MASS MARKET PRICES ARE HOLDING STEADY, shored up by HDB resale prices, so launches for this segment have been well-attended, including this preview (above) at Waterfront Waves in Bedok Reservoir. -- PHOTOS: FRASERS CENTREPOINT, CREDO REAL ESTATE

Prices for post-Chinese New Year launches are unlikely to head south over the next three months, consultants said.

'Major developers are financially strong, so buyers can't expect price cuts at launches,' said Knight Frank director of research and consultancy Nicholas Mak.

Even if the stock market suffers, the property market tends to lag behind by two to three quarters. Usually, property prices fall only when there's a recession or general weakness in the labour market, said Mr Mak. Singapore is not facing either of those scenarios and they are not expected to arise, he added.

But individual sellers and some smaller developers could find themselves over a barrel in the months to come if buyers stay home.

Developers certainly have an ample supply of projects for launch, having picked up a slew of sites during the boom times in the past two years.

While many can delay launches, those with 99-year leasehold sites might not be able to hold out for long, said a developer.

Still, even if developers are unwilling to cut prices, they could be more willing to negotiate in today's more subdued market.

'Officially, their prices might remain at the levels seen last year, but they could be more open to serious but slightly lower offers,' said Savills Residential director Ku Swee Yong. However, he does not expect them to budge by more than 5 per cent.

And there are still buyers out there looking for homes. Take the situation at the 618-unit Farrer Court. Owners there will receive their collective sale proceeds early next month and not all would have bought a home yet.

Time for homebuyers to do their homework

FIGURES from the Urban Redevelopment Authority (URA) show that private home prices shot up 31.2 per cent last year - way up from 10.2 per cent in 2006 and very close to the spurt seen in the 1996 peak year.

High-end property prices have far exceeded the 1996 peak while mid-tier homes are on a par, noted one market watcher.

Mass market property is a different story. Prices are still below the last peak and good buys could pop up, Mr Ku said.

This segment remains supported by HDB resale flat prices, which rose 17.5 per cent last year, the fastest growth seen since prices shot up by 25 per cent in 1996.

Buyers need to do their homework and look for properties in 'good' locations, with easy access to public transport. They could consider fairly new, completed condominiums near an MRT station, said Mr Ku.

They might even look at suburban landed homes, said Mr Ku, who feels those in the Upper Thomson Road to Mandai Road stretch are still undervalued.

As for new mass market launches, the 99-year leasehold Waterfront Waves in Bedok Reservoir has done fairly well. Eighty of the 148 units have been sold. Prices remain at $690 to $870 per sq ft.

'I think buyers are slowly gaining the upper hand - if they do not already have it,' said Chesterton International's head of research and consultancy, Mr Colin Tan. 'For every buyer, there are many sellers right now. But their expectations are different, there is still a wide gap in between and no sales are taking place.'

Nevertheless, if the stand-off lasts longer than expected, some developers and sellers could panic and slash prices so as to draw in buyers, said market watchers.

These are likely to be the very small developers or new entrants facing a credit crunch, they said.

'Singapore's property market is still bullish. The external factors affecting it are actually good because they have stopped the market from overheating,' said a seasoned property investor.

'Developers were selling at tomorrow's prices. Now, they might have to ask for today's prices.'