Developers urged to dangle juicier incentives as property prices drop further

Buyers have the upper hand.

Private residential property prices have been dropping for eight consecutive quarters. As stringent cooling measures continue to keep buyers away from the market, analysts note that developers and sellers need to roll out more tempting offers in order to book sales with reluctant customers.

“In the absence of sustained demand drivers, coupled with the worsening of the economic situation over the recent months and the risk of a technical recession in the 3Q, developers and owners need to give further incentives to push for deals,” said Christine Li, Director of Research at Cushman and Wakefield.

Li noted that the steeper price decline in Q3 proves that demand continues to be sluggish, particularly as foreign buying continues to be deterred by hefty stamp duties.

“Bargain-hunting is the main buying driver in the market and this could have resulted in a steeper decline in prices. Even though Singaporean buyer’s share has steadily increased, non-PR foreigner buyer’s share for non-landed homes excluding EC has declined from 10% to 4% over the same period. Hence, the further dwindling of the demand could be the result of foreigners staying away from Singapore’s residential market,” she said.

PropNex CEO Ismail Gafoor noted that there cpmtomies to be a deadlock between homebuyers, sellers, developers and the government.

“Homebuyers are highly discerning with some holding back their purchases in anticipation of prospective price declines and/or launches in good locations or attractive prices. Developers are selective on when to launch their new projects to avoid ‘bunching’ their products with other competitors which will further dilute demand, with an eye on government stepping in to adjust some of the cooling measures,” he said.

In order to sell units, developers need to match prices with current market sentiments, Gafoor said. 

“Primary market performance will largely depend on developers finding the right pricing strategy which accurately portrays current sentiments. Buyers will still remain very price sensitive and quantum sensitive and would only go in if they perceive the property to be a good value proposition,” he noted.