Do not expect the private residential property market to cool abruptly in the second half of this year. While property sales and home prices in some segments may soften in coming months, industry experts say the market is not likely to see a steep correction.
Observers believe buyers still have excess funds to chase more units here, with many considering property investing to be a safe haven compared to the volatile stock market. Market watchers expect 600 to 1,000 units to be sold each month, for the rest of the year.
While this is slower than the more than 1,000 units sold monthly from January to May, property analysts nonetheless say this level of demand suggests the market remains buoyant.
For the whole year, analysts expect total sales to hit between 12,000 and 15,000 units, thanks to the strong sales in the first half of the year. Sales of 7,666 private homes were recorded from January to May, more than the 7,073 sold in the same period last year.
Analysts believe the European debt crisis will lead to slower sales in the months ahead, compounded by the mismatch between buyers’ and sellers’ expectations, and the Government’s cooling measures taking effect.
“Buyers may factor in the risks in the global market but sellers are not prepared to give that kind of discount, thinking the market will eventually improve,” said Mr Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic.
Private property prices may rise by between 10 and 15 per cent for the whole year.
Mr Mak said: “Developers are not likely to cut prices because they have the financial resources (from earlier strong sales) to hold on to. They also face low holding costs due to the low interest rates.”
As for high-end homes specifically, prices in this segment still “have upside potential since they are still 15- to 20-per-cent lower than the peak levels in 2008,” said Mr Donald Han, managing director of property consultancy Cushman and Wakefield.
Meanwhile, the large supply of land to be made available by the Government in the next six months – 27 residential sites and four mixed-use sites potentially yielding 13,905 residential units – should temper the aggressive bidding among developers, and this could have an effect on the en bloc market.
“Developers will be spoilt for choice in the Government Land Sales programme, which has a faster process. There is also no complexity arising from litigations as seen in en bloc sales,” said Mr Mak.
Source: Today, 28 Jun 2010