The rise in sale of new homes after property-cooling measures were eased has led to developers bidding aggressively at Singapore’s land auctions, reported Bloomberg.
According to Cushman & Wakefield revelations, there has been a high rise of developers bidding on each land tender from 8.3 in 2H 2005 to 13.3 in January to April 2017. The developers also paid at a premium of 29%, which is also the highest price paid in the last 5 years.
An auction for land held in April 2017 drew the attention of 24 bidders in the midst of rising demand from Chinese and Malaysian developers.
“There has been a change in sentiment and a feeling of a bottomed out market. Just as other Singapore property developers, we eagerly want to increase our land stock since we are somewhat starved,” said Christopher Tang, Chief Executive Officer Frasers Centrepoint.
A May 15 report showed that sales of new homes were more than twice in April 2017 in comparison to 2016. They reached their top level in March after 4 years, with buyers taking up units at properties that include Seaside Residences.
Even though there are positive signs, the magnitude of a return may be restricted by the efforts of the government to prevent any new overheating of a property market that reached the peak in 2013. As it tweaked some of the property cooling measures in March and in turn enhancing buyer sentiment, the government did not touch majority of the restrictions.
The efforts of Singapore are in contrast from the failure of Hong Kong to tame its property market where prices of homes keep beating records. Prices of homes in Singapore reduced by 3% in 2016 and fell for 14 consecutive quarters. This was the longest fall since 1975 when the data of home prices began to be published. Next time the quarterly price data will be available is on June 15.
“The market sentiment has risen considerably. Buyers are ready to purchase property given the possibility of prices bottoming,” said CBRE Group head of research, Mr. Desmond Sim.
Mr. Sim noted that buyers had built-up demand since developers had avoided the launch of projects in the last months of 2016. The developers are now back and they offered 1,616 units in the month of March, the largest number from May 2014 based on Cushman & Wakefield.