The government launched eight residential sites – which can yield an estimated 3,340 private and executive condominium homes – in Q1 2010, as developers clamoured for plots to replenish shrinking landbanks and buyers continued to snap up new homes.
Five of the sites – on which some 2,175 housing units can be built – have been sold to date. The tenders for the remaining three sites will close in the next few weeks.
In contrast, no sites were launched or sold by the state in Q1 2009 amid a depressed property market.
‘The government is responding to developers, who are short of land, as well as consumers, because of how the market has been behaving,’ said Knight Frank chairman Tan Tiong Cheng.
Most of the sites launched for sale by tender in Q1 2010 are for mass market homes, as ‘mass market projects that have been launched have been very successful’, he added.
The government pushed out new supply as demand for new homes continued unabated. Analysts estimate that 3,600-4,000 homes were sold in the first three months of this year – more than double the 1,860 units sold in Q4 2009.
The launch and sale momentum is expected to continue into Q2. Property firm CB Richard Ellis expects developers to sell around 3,000 new homes this quarter and said that the government land sales programme will be a ‘viable source’ for developers to replenish their stocks.
Analysts welcome the fact that the spotlight has turned to landbanking and launches instead of policy tightening talk.
Adrian Chua of DBS Vickers said that last week’s triggering of two sites on the government’s reserve list – a 1.9 ha white site in Jurong Lake District and a 3.02 ha residential site at Hougang Avenue 2 – shows that appetite for land remains strong and developers are taking the initiative.
Six tenders for private residential and executive condominium sites put up for sale by the government – including three for sites that were launched in Q1 2010 – are expected to close in April and May.
‘The strong sale calendar is expected to be positive for developers looking for landbanks, particularly those that are active in the mass-market segment,’ said Mr Chua.
With significant supply in the pipeline, private home prices are expected to rise at a gradual pace, held in check by the government measures and financial prudence on the part of buyers, analysts reckon.
The market appears to be stabilising, according to Foo Sze Ming of OCBC Investment Research. The Urban Redevelopment Authority’s official price index for private homes showed prices rose 5.1 per cent in Q1 2010 – slower than the 7.4 per cent clip in Q4 2009 and 15.8 per cent rate in Q3 2009.
In the HDB resale market, prices gained 2.7 per cent quarter-on-quarter in Q1 2010 – a slower rate of increase in comparison to 3.9 per cent in Q4 2009 and 3.6 per cent in Q3.
‘Recent government measures were aimed at achieving stability in the property market, and with the latest data showing signs of stabilisation, this could ease concerns of further government intervention in the property market and drive the re-rating of Singapore property developers,’ Mr Foo said.
Source: Business Times, 12 Apr 2010