reporter2
19-03-18, 20:16
http://www.straitstimes.com/business/property/property-frenzy-a-big-worry
Property frenzy a big worry
Dennis Chan
Deputy Money Editor
Mar 13, 2018
That home prices are firmly on the uptrend on the back of improving sentiment and economic growth is no longer in doubt. The more pertinent question is: Are we witnessing a gentle recovery, which is seen as the preferred outcome for policymakers?
The signs are not promising. The recent tender for an executive condominium site in Sumang Walk in Punggol drew 17 bids, with each of them higher than the previous record in 2013 for a site near Jurong Lake.
This is worrisome as the hunger by developers for residential sites has filtered down to the hybrid housing market and raises questions about whether the cooling measures introduced by the Government between 2009 and 2013 remain effective today.
To recap, private home prices fell by about 11 per cent by the second quarter of last year from its peak in the third quarter of 2013. But two consecutive quarters of gains in the second half of the year meant that private home prices posted a 1 per cent rise for the whole of 2017.
The property industry has downplayed this, with key players taking great care to describe the recovery as nascent - a subtle message, perhaps, to the authorities to let market forces run their course, and not interfere prematurely.
Unlike the last rally, which was initially driven by end users riding on ultra-low interest rates amid a supply crunch, the optimism now is led by overeager developers seeking to replenish their land bank.
Meanwhile, collective sales efforts are growing as home owners try to make hay while the sun shines.
Even if a small fraction of the 120 collective sales in the works comes to fruition, the effect on property prices is to make them sticky-down, a situation in which prices move up easily but are resistant to falling. Successful sellers, flush with cash, may further drive up prices in their search of a replacement home, while those whose homes have not yet come under the collective-sale hammer will hold firm in their asking price, hoping that their day in the sun will also come.
Property frenzy a big worry
Dennis Chan
Deputy Money Editor
Mar 13, 2018
That home prices are firmly on the uptrend on the back of improving sentiment and economic growth is no longer in doubt. The more pertinent question is: Are we witnessing a gentle recovery, which is seen as the preferred outcome for policymakers?
The signs are not promising. The recent tender for an executive condominium site in Sumang Walk in Punggol drew 17 bids, with each of them higher than the previous record in 2013 for a site near Jurong Lake.
This is worrisome as the hunger by developers for residential sites has filtered down to the hybrid housing market and raises questions about whether the cooling measures introduced by the Government between 2009 and 2013 remain effective today.
To recap, private home prices fell by about 11 per cent by the second quarter of last year from its peak in the third quarter of 2013. But two consecutive quarters of gains in the second half of the year meant that private home prices posted a 1 per cent rise for the whole of 2017.
The property industry has downplayed this, with key players taking great care to describe the recovery as nascent - a subtle message, perhaps, to the authorities to let market forces run their course, and not interfere prematurely.
Unlike the last rally, which was initially driven by end users riding on ultra-low interest rates amid a supply crunch, the optimism now is led by overeager developers seeking to replenish their land bank.
Meanwhile, collective sales efforts are growing as home owners try to make hay while the sun shines.
Even if a small fraction of the 120 collective sales in the works comes to fruition, the effect on property prices is to make them sticky-down, a situation in which prices move up easily but are resistant to falling. Successful sellers, flush with cash, may further drive up prices in their search of a replacement home, while those whose homes have not yet come under the collective-sale hammer will hold firm in their asking price, hoping that their day in the sun will also come.