Tuesday, June 17, 2014

Don’t rejoice yet: Why May’s property sales are not cause for joy

Link Here

From URA Website.
From URA website.


[Here’s more from Maybank Kim Eng:


YTD sales of 4,010 units (excluding ECs) were just half of last corresponding period’s. We thus cut our full-year new home sales projection by ~30% to 9,000-10,000 units (from 13,000-14,000 units).
In view of this, we cut our full-year new home sales projection (excluding ECs) by ~30% to 9,000-10,000 units (from 13,000-14,000 units).
+
The key catalysts for the expected price decline include:
i) More developers adopting a ‘priced-to-sell’ approach to reduce inventory risks;
ii) Prospective homebuyers holding back in anticipation of the surge in physical completions in 2015 and 2016; and 
iii) Continued weakness in the HDB resale market to negatively impact the wealth effect, reducing upgraders’ demand for mass market private homes.]

Sunday, June 08, 2014

Unsold homes big drag on developers coffers.

Link 

Moving forward all hopes are on the government to slowly loosen the cooling measures to prepare for a soft and comfortable landing. Anyway most developers have done very well for the past 8 years.  The cooling measures might had hit them but are necessary to ensure that the housing market's bubbles if it exist, will not explode into a big mess.

[Given that the QCs allow developers up to five years to finish building a project and two more years to sell all the units, the heat is on developers to clear their stock by the deadline.
To extend the sales period, developers pay 8 per cent of the land purchase price for the first year of extension, 16 per cent for the second year and 24 per cent from the third year onwards. The charges are pro-rated based on unsold units over the total units in the project.
Such fees drove luxury residential player SC Global to delist from the Singapore Exchange last year after sales slowed significantly due to the government's property cooling measures.
Analysts warn that more extension charges will kick in. The charges paid up so far are just the tip of the iceberg as projects built from land acquired during the 2006-2007 en bloc fever have just crossed a seven-year mark, they say.
"More developers are caught between a rock and a hard place" as they have to decide whether to pay the extension charges or cut prices to move the units, said SLP International executive director Nicholas Mak.
If they pay for extension charges, there is also the question of whether they can recover these costs later on, he said. This is why some developers of luxury projects are resorting to selling the units in bulk to mega investors.]