SINGAPORE: Although Anthony and his family of six are now living in a freehold condominium around the Holland Road area, he is planning to buy a second private property.
On the first weekend of May, joint developers Hoi Hup Realty and Sunway Property sold 216 or about 27 per cent of their freehold condominium project, The Continuum, located in Tanjong Katong. The average price of the units sold was S$2,732 psf.
However, he added that the sales rate “has been generally within expectations” based on data forecasts. Agreeing, Mr Nicholas Mak, chief research officer at property platform Mogul.sg, pointed to how some people are willing to pay a premium for a first-hand car, when a two-year-old car of the same model can be bought at a relatively cheaper price.
For example, upon completion of foundation work, the buyer will begin paying monthly instalments for 10 per cent of the unit. After the next milestone of reinforced concrete framework is completed, the buyer will start paying instalments for an additional 10 per cent.In contrast, a person buying a resale condominium now would be charged the interest rate for the full amount of loan that they are taking.
Currently reaching the minimum occupancy period of his five-room Build-to-Order flat in Jurong, Jack, who wants to be identified only by his first name, said the next step to upgrade is either by buying a flat in a better location or a private property. The fact that Singapore is land scarce suggests that land prices would likely continue to climb, said industry experts, reaffirming the general belief in the real estate market here.
“Fear of missing out is a major contributory factor as anxious buyers rush to market in anticipation of further cooling measures,” said Mr Devadas Krishnadas, directorSome property agents said that they occasionally have such discussions with clients who are in two minds about buying a private property owing to the relatively steep prices.
In fact, many who bought private properties in the early to mid-1990s at rising prices then saw the value of their units drop or stay depressed for up to about a decade. “Sentiment is clearly running ahead of fundamentals and that is the definition of a bubble,” said Mr Devadas, who has 25 years of experience in the public and private sectors.
It should be noted that even without a recession, profits are never guaranteed when one offloads a property. Dr Gee questioned if a property “should even be considered an investment first before a shelter, before a roof over your head”, adding that the value of assets should be underpinned by some form of utility.
Experts pointed out that the use of retirement saving accounts to fund property purchases is not unique to Singapore. On the other hand, Prof Sing from NUS said that the use of CPF funds to buy second and more property investments could have negative implications. “This period of pause can range from one to two quarters, or to an extended period depending on the nature of the measures announced and other factors such as the prevailing supply of saleable inventory.”“As it stands, the housing market in Singapore is not at risk of being bubbly. Cooling measures over the decade have ensured the housing market has remained grounded by fundamentals,” said Mr Singh.
Currently, developers have been bumping up the psf prices to widen their profit margin. But to make the overall price of each unit still relatively affordable to buyers, developers have instead been shrinking the floor space of homes, he said.“If the authorities stipulate a certain size requirement, developers will not be able to raise the price per square feet that aggressively. This will almost overnight slow down the price growth,” said Mr Mak.
This however, still gives developers some degree of freedom to permutate the mix of unit types and their respective floor area to maximise profit.In response to TODAY's queries on the bullish demand for new condominiums and whether the authorities will be looking at further measures to cool the market, the Ministry of National Development said there are two main drivers for the strong housing demand in Singapore.
It added that to help ensure a stable and sustainable property market, the government has implemented three rounds of property market measures since December 2021.
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