An interesting price game of developers

An interesting price game of developers to increase sales of new private homes

 

The sales growth pattern that has been reported by the executive condo (EC) have shown a spectacular sales rate. Developers are succeeded to sell out 8136 of the private homes in the last years which make it up to 9.4 percent of the sales that had been done in the previous years. The numbers by the government have clearly shown that the developer has finally found the buyers for 4018 EC units. However, the key factor that has been considered as a key behind it is the prices that have been mentioned by the developers. This price is the major reason behind the increase of market sales at ECs. ECs are the hybrid housing schemes. The sales figure of 2016 is based on the sales figures of December provided by the developers.

Unemployment is expected to be a higher percentage in the year 2017 as reported by the research head of CBRE Singapore and south-east asia, Desmond Sim, The pricing tactics for developers play a considerable role. The sweet spot, S$1 million or less, is needed to achieve sales volumes. To maintain this sweet spot, unit size is the critical part to focus on considering that land prices have gone up in the last one year.

 

In 2017, the pricing strategy of the developers focused on the point that affordability will rule the day. On this note, the national director of JLL, Ong Teck Hui said:  There will be a need for developers to be watchful over pricing considering that the market is price sensitive in terms of rise in interest rates and property cooling measures.

 

Christine Lin, the research director of Cushman and Wakefield also focused on the silver lining that will be faced by the developers who had paid a higher price for the land in the last years and now they are stuck on a point where they have to lower the prices to increase the attraction of their projects. The slow economy is the cause of a fall in the construction costs that is the point which helped the developers in to get rid of the cost pressures. For example, the construction cost was $300 per square foot (psf) some time ago and now it is S$270 psf.

 

Ms Li from Cushman and Wakefield was the one who had predicted an increase of about 10 percent in the number of private homes i.e. the developers will have to move towards 8950 unit in this year. The current parameters of the market such as interest rate, good quality pipeline projects and sufficient liquidity can help sustain the transaction volume. From mainland Chinese, there will be extra demand from foreign buyers due to Hong Kong recently raising stamp duty rates. These duty rates apply to non-residents who buy 15 to 30 percent residential properties.

 

Refer to link below for more information,

http://www.businesstimes.com.sg/real-estate/developers-to-keep-playing-quantum-price-game-this-year

 

 

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