Private home developers flex financial muscle in price standoff with potential buyers

Sellers are unlikely to lower their price expectations.

Data released today by the Urban Redevelopment Authority (URA) showed that private residential property resale prices fell by a mere 0.6% in Q3, revealing that a price deadlock continues to exist between potential buyers and sellers.

According to Colliers International, potential sellers expect that there is still some time before interest rates increase and due to their current financial muscle, they are unlikely to lower their price expectations.

Sellers are also likely to time their sales in order to minimise the impact of seller’s stamp duties. Colliers also notes that developers have also enjoyed the gains in the residential property price run-up from 2005, which gives them financial power to maintain current prices or else offer moderate discounts.

“Potential buyers are well aware of the current downtrend in prices and they refrain from making purchases now, in expectation of even lower prices in the near term. Hence, the price impasse. Furthermore, in the higher-tier market, completed developments have and are expected to receive some support from high-net-worth individuals who are increasingly scouting for opportune bulk purchase of high-end residential units that have potential for long-term capital appreciation as well as steady recurring income. This could lend some support to prices in the high-end market,” stated Chia Siew Chuin, Director of Research & Advisory at Colliers International.