Govt asked to release more land sites in less central areas

Property developers in Singapore are calling for the government to release more land sites in less central areas so that they can build more affordable mass market homes.

On the sidelines of a lunch hosted by the Real Estate Developers’ Association of Singapore (REDAS) on Friday, industry players said demand for private homes will continue to rise and push up prices.

It said most of the recent residential sites released for tender have been in “hotspot” areas. These are places located near MRT stations and other neighbourhood amenities, and cost more than those located further away.

REDAS has since requested for the Urban Redevelopment Authority to release a more even spread of sites.

Simon Cheong, president of REDAS, said: “There is an adequate number of sites now, to be honest. But perhaps in the next confirmed list, we’ll have sites that are more spread out across the island for developers to pick from.

“Land that is not in an MRT area or in a ‘hotspot’ probably would have a lower price, so the developer would have a better choice for homebuyers. In other words, more affordable land for developers will mean more affordable products for the consumers.”

The current home-buying frenzy has been largely attributed to pent-up demand for private property over the past 12 months. REDAS does not expect a property bubble to form as current prices are being supported by fundamentals.

Preliminary data released by the government on Thursday showed that private home prices rose almost 16 per cent in the third quarter – the highest quarterly increase in almost three decades.

It noted that this is not just being driven by high net worth investors, but also by growing local demand.

“It’s important to see that we have an increase in population… that’s something not to be ignored. So if you marry that together with global demand and regional demand, it adds to quite a bit of spike in demand,” said Steven Choo, CEO of REDAS.

Experts said private home prices are likely to keep moving upwards, despite recent government moves to cool down the market, such as eliminating the Interest Absorption Scheme (IAS).

“The take-up of IAS among developers was a very small proportion, so the impact wasn’t that great. We don’t see prices coming down. The question is not whether they are coming down, but whether they are going to escalate even higher, so I think prices will remain firm,” Mr Cheong added.

Source: Channel News Asia, 2 Oct 2009