Apr 23, 2012 | Comments 0
Trying to control Singapore’s property prices by increasing the supply of land as part of the government land sales program me may no longer be effective.
According to Channel News Asia, this means that property prices may continue to remain high due to strong demand for such projects.
The government’s latest release of six sites for residential development are expected to generate strong interest from developers.
Last year, a record number of 35 land parcels for private residences were put out for sale by the government.
“Developers through their innovative design and so on, are increasing the elasticity of demand. In other words, whatever the government can push out, developers are able to absorb that supply and turn them into new products which the market is buying up,” said Nicholas Mak, executive director, Research, SLP International. “So the policy of trying to stabilise prices or reducing prices by pushing out more land parcels is actually not working out as initially planned.”
Record sales of residential properties in recent months have also boosted developer’s confidence. Analysts said developers are now willing to bid higher for choice sites and the site at Buangkok Drive will attract seven to 12 bidders.
While the six sites are estimated to yield 2,380 units, this number could turn out higher due to a shrinking size of the unit to make space for more units and offset the pricier piece of land.
With low borrowing costs and aspirations of HDB upgrades, demand is predicted to remain high.
“Generally developers are still positive about the property market because they feel that people still want to upgrade, (and) move into a private condominium residential unit,” said Lee Sze Teck, senior research manager.