Government cooling measures failed to deter property buyers at recent sales

Buying interest remains upbeat in some projects.

Stringent property cooling measures are not keeping property buyers off the market. Even as prices fell islandwide in 2Q14, recent sales nonetheless provided a level of support for struggling developers.

According to Colliers International, developers are now pricing their projects competitively in order to maintain sales momentum.

“Strong buying interest in the 845-unit Commonwealth Towers and 212-unit Kallang Riverside provided some level of support for prices – these projects benefitted from the pent-up demand, as there has been little launch activity in these two locations,” noted Chia Siew Chuin Director of Research & Advisory for Colliers.

Here’s more from Colliers:

In view of the continued enforcement of various government policies and loan curbs as well as purchasers’ cautious stance, developers are expected to price their projects competitively to maintain sales momentum. 

Given that private home prices have declined by 2.3% (according to flash estimates) over the first six months of 2014, the price fall for the entire of 2014 will likely come in at the lower end of the initial -5% to -8% forecast.

Although developer launches and sales activity picked up in 2Q 2014, this was generally achieved at the expense of a competitive pricing strategy, which resulted in a decline in the overall private residential price index.

For projects already on the market, such as The Panorama and Sky Habitat, developers were able to overcome the slowdown in buying momentum after prices were adjusted downwards.

For new projects, developers were able to draw buyers through attractive price points. During the quarter, buyers continued to be drawn to projects with positive project attributes such as attractive pricing and good location.

Over the next six months, the air of caution is expected to linger on so long as the punitive cooling measures and stringent loan curbs remain in place.

This is on the back of persistent external headwinds, including the nagging risk of a hard landing in China and escalating crises in Iraq and Ukraine, the overall tentative growth in the global economy as well as the impending interest rate increase which could set in as early as 2015 along with the expected tapering of the United States Federal Reserve’s tapering programme.