Developers may raise prices by 2%
DESPITE expectations of more headwinds, developers are unlikely to lower prices, said Savills Singapore in a report on Friday.
In fact, the global real-estate services provider has forecast that overall prices could creep up by 2 per cent this year, contrary to market expectations of price falls.
Mr Alan Cheong, the senior director at Savills Research, Singapore, said: "Market expectations of sharp price declines are not supported by the facts."
He noted that many mass-market and mid-tier projects are in the hands of financially strong developers, who are unlikely to lower prices below comparable benchmarks just to clear their stock.
Indeed, despite weakening demand sentiment due to the credit crunch - with the Additional Buyer's Stamp Duty and total debt servicing ratio framework biting - developers had aggressively rolled out major projects islandwide in October and November.
These include The Inflora and Duo Residences, as well as the executive condominiums Sky Park Residences and Waterwoods, with the sale of units at Waterwoods driven by competitive pricing.
Notably, three projects surprised the market with healthy sales. At The Inflora, 388 out of 396 units, or 98 per cent, were taken up; the figure for Duo Residences was 90.9 per cent (600 out of 660 units) and for Alex Residences, 85.5 per cent (171 out of 200 units).
As the impact of the property measures sets in and trims buyers' purchasing power, affordability and the right pricing will become critical factors in the success of a project launch, said Savills in its report.
It predicted that prices will likely continue to be supported by mass-market and mid-tier projects.
Savills has also forecast that prices in the Rest of Central Region (RCR) and Outside Central Region (OCR) could go up by 1 to 3 per cent in the coming year, even as those of high-end homes in the Core Central Region dip.
It noted that mid-tier projects in the city fringe may see greater interest from investors than mass-market projects in the OCR, even as homes in the RCR offer increasingly better value propositions to investors.
This may result in mass-market projects losing their shine as market leaders in terms of sales volumes, ceding pole position to mid-tier projects in the city fringe.