With strong sales of new residential units in the prime districts in the third quarter, prices have gone up in tandem.But in its latest report, property consultant Jones Lang LaSalle (JLL) also noted that the gap in prices between new units and resale ones had widened substantially.
Prices of new residential units in prime districts hit an average of S$2,500 per square foot during the third quarter.
According to JLL, this was a jump of almost 61% from the previous three months, and it was due to several high-end projects being sold.
But at S$2,500, it was at a record premium to the average price of $1,220 per square foot for resale units.
While this may encourage more homeowners to consider en bloc sales, JLL said homebuyers will find it more attractive to buy resale units. This will in turn cause the premium to narrow.
"Whether the premium is enough to encourage 'en bloc-ers' to put their projects in the market, the answer is no, unless the 'en bloc-ers' revise their expectations... But probably from now onwards, you'll look at premiums towards the 40% to 70% range," said Lui Seng Fatt, Regional Director & Head of Investments, Jones Lang LaSalle.
JLL is expecting prices of new units to grow at a slower pace, causing the en bloc market to be moderated. This is especially so, given the stricter rules surrounding collective sales.
"In terms of the number of sites that have gone through, it probably will be moderated, but the value will still remain high. So I think you can see a fair amount of en bloc activity in the market, but we probably won't be seeing what we've been witnessing in the last three quarters where the en bloc sales are almost going at about 30% to 40%," said Lui.
Analysts say that as premiums narrow and en bloc activities slow down, developers will find it increasingly less attractive to undertake new projects, especially in light of diminishing returns and changes to the Strata Titles Act. - CNA /ls
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