Augustine Tan, President of Redas. (Photo: Far East Organization)
Despite signs of the property market picking up, Real Estate Developers’ Association of Singapore (Redas) President Augustine Tan believes that it is still too early to assume that the market has finally turned positive and recovery has kicked in, reported TODAYonline.
This comes as the city-state’s macroeconomic fundaments are still not strong, while the global economy’s growth remains anaemic amid rising US interest rates and geopolitical risks.
Tan also pointed to the supply overhang of around 37,000 uncompleted units as at Q1 2017, of which 43 percent remain unsold. He noted that it will take about two years to absorb the existing stock, given the current new private home transaction volume of around 8,000 units in 2016.
A potential supply of 8,125 private housing units were also released under the Government Land Sales programme for 2H 2015, while another 5,300 units may come into the market in the event the 25 potential sites for en bloc sales are successfully transacted.
“Our concern is if the prevailing ‘bullish’ appetite for residential land persists amid pending rising interest rate and weak employment prospects, demand will weaken over time and hasten the compounding effects of increasing supply and high vacancy,” said Tan at a property market seminar held last Friday (7 July).
In fact, he expects the record high bids put forward by developers for land to affect future land sales in Singapore, and eventually lead to high house prices.
“The land prices have gone beyond the final product price backed by expectations that markets will improve… It will certainly drive up housing property prices as developers will expect a decent return. High land price equals high end product prices.”