Kaeden Ong

Successful launches may struggle later

Posted by Kaeden Ong on 16th July 2014 in Blog

The recent decline in private home prices, according to the Urban Redevelopment Authority (URA)’s flash estimate, marks the third continuous quarter of price decrease.

In a statement, JLL cites the continued softening as a reflection of the imbalance between supply and demand. This has led to new launch prices being toned down, as well as prices of previously launched projects, which are struggling with poor sales, being reduced.

Examples of lowered launch prices include Lakeville and Coco Palms. Although they were registered as the top two numbers of caveats in Outside Central Region (OCR) in Q2 2014, their median prices of $1,318 and $1,020 psf respectively is estimated to be 10 to 15 per cent below what they could have been launched at before the total debt service ratio (TDSR) was imposed.

As for slashed prices, Sky Habitat registered the highest number of caveats in Rest of Central Region (RCR) in Q2 2014 with a median price of $1,371 psf. This is 13 percent lower than during the quarter when it was first launched.

Ong Teck Hui, National Director of Research & Consultancy at JLL said, “Although some projects seem to be launched ‘successfully’ with good sales take-up, they still subsequently struggle to move unsold units.”

To move sales or to launch new projects at moderated prices, some developers feel they have no choice but to trim prices. “However, price cuts raise buyers’ expectations of further discounts and this feeds into a downward price cycle as we are seeing, albeit a gentle one, currently,” Ong said.

He added the price index decline of 1.1 percent in Q2 2014 is in line with JLL’s expectations of average quarterly drops of between one and two per cent for this year.

Credits: Property Guru

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