Augustine Tan, President of Redas. (Photo: Far East Organization)
While City Developments Limited and Hong Realty acquired Amber Park for a record $1,515 psf per plot ratio, Real Estate Developers’ Association of Singapore (Redas) president Augustine Tan warned that the fast rate by which developers acquire private residential sites at higher prices today may not be sustainable, reported the Business Times.
“With property measures in place, slow growth in Singapore’s population and manpower curbs, we do not see runaway demand in sales transaction volume and property prices in the next few years,” he said at yesterday’s Redas Mid-Autumn Festival Lunch.
In fact, he expects many, including the displaced sellers from collective sales, to downgrade to public housing.
“Hence, if the prevailing ‘bullish’ appetite for residential land persists while demand (for end units) is not sustained, it will hasten the compounding effects of increasing supply and high vacancy.” He also expects interest rates to continue its increase.
Despite the upturn in the Urban Redevelopment Authority’s (URA) private home price index, Tan noted that rents are still falling and new completions are adding to the inventory at a time when multinational companies are downsizing or recruiting at a cautionary pace.
The vacancy rate also remains high at 8.1 percent as at Q2 2017.
“While the residential property market appears to be on the mend and developers are aggressively replenishing their land bank to sustain their business, the length and amplitude of this new cycle is uncertain,” concluded Tan.
Knight Frank Asia-Pacific president Tan Tiong Cheng described Tan’s speech as a “sombre reminder” to the government and potential private home buyers that while “prices seem to have reached an inflexion point, the usual downside risks are still ongoing concerns”.
This article was edited by Keshia Faculin.