Collective sale fever may not lead to higher prices
Minister: Cooling measures will ensure developers sell homes at reasonable prices
The recent collective sale frenzy will not necessarily result in higher prices for condominium buyers down the road, Minister for National Development Lawrence Wong said in Parliament yesterday.
Prices will be determined by demand and supply, and existing cooling measures like the additional buyer's stamp duty (ABSD) will ensure developers will "sell within a reasonable price", Mr Wong said in response to Dr Lim Wee Kiak, an MP for Sembawang GRC..
About 2,700 existing private residential units have been sold en bloc this year, an increase from 600 last year, Mr Wong said.
'NEW SUPPLY'
While some may think that the high bids by developers will result in higher prices down the road, he said the collective sale sites taken off the market now will be put back in the market in the next one to two years.
That will add new supply to the market and put some "moderating pressure on prices".
Mr Wong said it also helps that since regulations were introduced in 2011, developers have to build and sell within five years of being awarded a collective sale site or pay the ABSD of 15 per cent.
Amber Park broke the freehold collective sale record when it was sold last month for $906.7 million.
Responding to Dr Lim's question about what has driven the frenzy, Mr Wong said developers have been keen to replenish land banks because of strong sales of new units in the first three quarters of this year.
As of the third quarter of 2017, there are 17,200 unsold units, compared to 40,000 in 2012.
Moreover, owners at ageing residential sites may be encouraged by last year's collective sale successes.
The Government will take into consideration the supply of new units fromcollective sales, along with population and income growth, as well as property market conditions to decide the quantum of land to be released under the Government Land Sales programme, Mr Wong said.
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