URA to include sales of delicensed projects in private-home price index from 3Q2016
By Michael Lim
/ The Edge Property |
URA will include sale transactions of delicensed residential projects in its computation of the quarterly private-home price index from 3Q2016. The announcement was made by Augustine Tan, president of the Real Estate Developers’ Association of Singapore (Redas), at its annual Mid-Autumn Festival lunch on Sept 14.
“I am pleased to note that through dialogue with Redas, URA will include sale transactions of delicensed projects in its property price index to improve transparency in the property market,” he said in a speech.
Since the beginning of September, URA has started collating sale transactions of delicensed residential projects for 3Q2016. A residential project is delicensed when it receives the Certificate of Statutory Completion and individual strata titles have been issued to buyers. Once it is delicensed, the project is no longer under the purview of the Controller of Housing, and therefore has the flexibility to launch creative marketing schemes to move units.
At Redas’ annual Mid-Autumn Festival lunch (from left): Chia Ngiang Hong, first vice-president of Redas; Daniel Teo, past president; Augustine Tan, current president; and Lawrence Wong, Minister for National Development and Second Minister for Finance
For delicensed projects, URA has been using data collated from records submitted to the Inland Revenue Authority of Singapore for stamp duty payment. Some industry players say this may not reflect indirect incentives given by developers to attract homebuyers. There was a flurry of developer sales in delicensed projects in the Core Central Region over the last six months, and as the incentives given by developers may not have been captured in the sales data used by URA to compute its price index, it could have led to a slight price inflation in the URA Property Price Index in 1H2016, say industry observers.
Developers of licensed projects, on the other hand, are required to submit weekly sales data to URA and indicate discounts and/or incentives to reflect the net sale price. This requirement was introduced in May 2015. “For new sales, the majority of units are sold by developers before the projects are completed and delicensed,” says a URA spokesperson. “A small percentage of all property sales is from completed delicensed projects.”
In his speech, Redas’ Tan highlighted some key issues in the real-estate industry, such as oversupply in the market, impact of the qualifying certificate and additional buyer’s stamp duty remission clawback, as well as rising vacancy and economic slowdown. Tan pointed to about 4,800 private residential units in 45 developments that remain unsold. These will be affected by the ABSD remission clawback from end- 2016 to 2018, he adds.
According to Tan, there was a pipeline of some 47,250 private residential units as at end-2Q2016. Of these units, nearly 21,500 remained unsold. However, URA clarified these 21,500 units include those in uncompleted projects as at 2Q2016. According to URA, the 21,500 units are “a historical low”.
“Although demand picked up in 2Q2016, the number remained moderate,” says Tan. “While there was some activity in the market, it may not have the momentum to drive volume and prices up.”
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