Two developers have brought forward their project launches by more than a week amid recent property cooling measures. Park Colonial at Woodleigh Lane and Stirling Residences on Stirling Road, which previewed over the weekend of June 30, were launched on the night of July 5.
At Park Colonial, more than 300 units were snapped up overnight at an average price of $1,700 psf. Park Colonial is a joint venture between CEL Development, the property development arm of listed construction group Chip Eng Seng Corp together with Heeton Holdings and KSH Holdings.
Stirling Residences, a joint development by Logan Property and Nanshan Group, was launched at an average price of $1,800 psf. The 1,259-unit development is located along Stirling Road, a three-minute walk from the Queenstown MRT station. It saw sales of close to 200 units on the first day of launch.
The project that sold the most units overnight was Riverfront Residences at Hougang Avenue 7. It chalked up more than 500 sales, with prices of units in the $1,200 to $1,300 psf range. The developer - a consortium led by Oxley Holdings - brought forward its launch by two days from July 7.
Marina One Residences likewise hastened its launch to July 5, with units at prices starting from $2,600 psf.
The reason for the rush was the government announcement shortly after 7pm on July 5, that it was raising additional buyer’s stamp duty (ABSD) rates and tightening loan-to-value (LTV) limit. This kicks in from July 6.
ABSD was raised by 5% for Singapore citizens and permanent residents, except for first time home buyers. For entities, ABSD was raised by 10%. An additional 5% that is “non-remittable under the remission rules” will also be introduced for developers buying residential properties for housing development.
The last time the government introduced cooling measures aimed at the private property market was at the end of June 2013, says Nicholas Mak, executive director of ZACD.
The measures are expected to put the brakes on runaway price increases and the current buying euphoria, says Eugene Lim, key executive officer of ERA Realty. “Taking the example from the implementation of the previous slew of cooling measures, downward price adjustments and “star-buy” promotions will help to move sales.”
Not everyone will be equally affected, adds Lim. “Those who are cash-rich are not as affected as those who are not as financially sound. A side-effect of these measures could be a widening of the wealth gap.”
Based on the land parcels that were sold in the past two years in government land sales and private land sales, some 28,000 to 30,000 private residential housing units could be launched in the next two years, notes Mak.
“As developers have a five-year deadline for their projects, they cannot hold back the launch of their projects for too long,” says Mak. If there is no government interference, the market will adjust to find its equilibrium, he adds. “This new round of curbs will reduce home buying demand, especially among investors.”
A majority of the new residential projects have a high proportion of smaller units, namely one-bedroom and two-bedroom units, which are aimed at investors. In some projects, these smaller units make up more than half of the total number of units.
Furthermore, many of the developers bought their land parcels in the past two years at prices higher than in the previous round of market upturn. They will have to launch their new projects at higher than the other older properties in the vicinity, notes Mak. “This new cooling measures will greatly increase the challenges facing these developers and could even hasten the market oversupply.”
The most adversely affected by this latest round of property cooling measures is the en bloc sale market. “En bloc sales happen on the upswing of a property cycle,” says Adrian Tan, partner of litigation and dispute resolution at TSMP Law Corporation, who was a speaker at EdgeProp 360+ ‘En bloc vs En block’ event on July 5. “If developers think we’re no longer on an upswing and that we’re now at a plateau, they will pause.”
Another speaker at the event, Tang Wei Leng, managing director of Colliers International agrees. “There’s already a pause in the collective sale market,” she says. “The pause will be even longer as developers will need to analyze [the impact of this latest round of cooling measures on] the property market.”
Cost is also major consideration, adds Tang. The hike in ABSD will mean higher cost for developers buying land, and for homebuyers looking for a new home.
En bloc beneficiaries looking for a replacement home will also be hit by higher cost, says ZACD’s Mak. “These owners may have to wait for months before they receive the entire collective sale proceeds needed to buy their replacement homes.”
Mak therefore sees the curbs simultaneously reducing demand from developers and discouraging some owners from selling their residential units in an en bloc sale.
TSMP Law’s Tan agrees. “For anyone who hasn’t reached 80% consent or launched [their en bloc sites] for tender yet, I would say you have to wait a few more years.”