Why peak residential sales are expected to be lower this cycle

There is no real housing demand.

The residential market has already changed following the recent tweaks in Singapore's property measures.

According to the takeaways from Jefferies’ meeting with property developer Roxy-Pacific Holdings, housing demand is not driving sales. Rather it was more of investment, better location and other factors which are boosting the sales in the housing market.

"Property measures need to be seen in historical context. Back in 2010, there was unmet real housing demand. So, private developers moved in fast and made money. HDB also boosted supply but unmet demand was huge and also amplified investment demand," Jefferies said.

In turn, peak sales and prices will be lower than the recent cycle, the report mentioned.

"In subsequent cycles, regulations will be about managing aspirations and investment demand of larger pool of population," it added.

Meanwhile, developers remain hungry for land while demand-supply does not allow developer to price up. More so, effective land cost has gone up as shadow gross floor areas such as bay windows, AC ledge, planter boxes, terraces, and corridors, has been disallowed.

Jefferies said the easing measures are more likely testing the water, as there is no expectation of any major changes for next 6-12 months.

"Prices are firm and buying momentum is coming back. There is unlikely to be any major change in immigration policies in near term," it concluded.