The annual GSS (Great Singapore Sale) may have started only on May 25. But for property new launches, the GSS started much earlier.
The sale is now on
With the steam of an overheated property market dying down, the buzz has now shifted to developers playing discount games to push new projects or clear old stock. With so many ‘great deals’, buyers are spoiled for choices.
1. MCL Land cut prices for Hallmark Residences in Bukit Timah and sold 39 units in February and March.
2. CapitaLand’s Sky Habitat in Bishan managed to move over 100 units after relaunched at 10 to 15 percent off its original prices set two years ago.
3. Wheelock Properties put up 95 units of The Panorama in Ang Mo Kio for balloting. With a discount of 12 percent, they claimed to sell 80 to 85 units.
4. China developer Ximeng Land relaunched the balance of 12 luxury villas on Pearl Island in Sentosa Cove, offering an 8 percent discount from a year ago.
It proves that ‘early birds’ enjoy no advantage. We don’t see developers giving rebates back to early buyers who have paid at premium prices.
Let’s face it: It’s a buyers’ market now!
I am particularly amazed by the 180 degree change of attitude at The Panorama. I visited the sales gallery three months ago. A developer’s representative was ‘patrolling’ there to ensure no photo-taking, no sales brochure before booking a unit …
Back in early January, a newspaper article mentioned that “hundreds of people visited the showflat” and “60 units out of the 120 units released were booked on the first day”. But the caveats show that only 56 units were transacted by end of April. So what happened to the units for the next 140 days after selling like hot cakes on the first day?
Anyway, the project won’t be completed until 2019. Who knows what the property market will be like five years from now?
Developers are now trying to transfer the risk of an unknown market to the buyers. Nonetheless, many buyers, especially first-time buyers and HDB upgraders, are excited by the new round of discounts and can’t wait to rush into the market.
More irresistible bargains on the way?
An HSR report revealed that 50 residential projects sold less than half of total units, including Hillion Residences in Bukit Panjang, Hillview Peak in Bukit Batok, Vue 8 Residence in Pasir Ris, The Glades in Tanah Merah, Treasure in Balmoral, Victory Ville, Devonshire 8, One Balmoral and 8 Raja.
Eight of these new projects sold less than 10 percent while two did not manage to sell any unit since their launch last year.
A Straits Times article on June 7 highlights the fact that 24 projects may be liable to $55.1 million in extension charges. Developers with foreign shareholders have to pay 8 to 24 percent of the land price to the government if they fail to sell their units two years after TOP. Projects that have already missed the deadline include Emerald Hill and The Marq.
All these facts are only the tip of an iceberg:
1. Many luxury homes in prime districts like Ardmore Park and Grange Road have been completed but not yet launched.
2. According to URA, as of 1st quarter 2014, there are a total of 6,733 private residential units launched but unsold. On top of that, an additional 80,261 private residential units are in the supply pipeline from the rest of this year to beyond 2018.
3. While developers are clearing their existing stock, every month there are new projects obtaining their TOP and new sites released by the government to build more private housing.
4. New project is not the only choice for buyers. There is strong competition from countless resale units whose owners are more flexible to slash prices if they are desperate to sell.
5. Local developers are competing with their counterparts from Malaysia, Thailand, Indonesia, Philippines, Australia, Japan, UK, US, etc. targeting the same buyers to move their current and future projects.
How can developers find so many buyers for their new units if they are only giving 15 percent discount? This is just the beginning of the big sale!
Where are the foreign shoppers?
In the midst of this ‘uniquely Singapore’ Property GSS, our most wanted foreign shoppers are nowhere to be seen.
Can participating developers seriously look into promotions targeting tourists from top-spending destinations? How about partnering with Singapore Tourism Board for organized shopping tours with free sightseeing, flight and accommodation bundled with booking a luxury home, with the 15 percent foreigner Additional Buyer Stamp Duty absorbed by the developers?
Afterall, individual developers have already stepped up their marketing efforts in overseas countries. For instance, S P Setia is now marketing Eco Sanctuary at Chestnut Avenue to buyers in Hong Kong who are suffering from Double Stamp Duty introduced by the local government.
Lesson learned: Sales of any product not meeting expectation at home can often find a new market in other countries.
The sale that worth waiting for
This year GSS is in its 20th year. Experienced shoppers like you and me have long become savvy buyers.
When the sale just starts, I am not in a hurry to buy. It is different from a private sale open for privileged customers for one day only.
Every sale starts with 10 percent discount for end of season sale; changes to 20 percent discount storewide; follows by further reduction of 50 percent; and ends with final reduction of 70 percent or more. Sometimes there is even a warehouse sale or moving out sale with massive mark-down of prices for stock clearance.
By then, I may not be able to find my size, or the color or style that I want. But it doesn’t matter. I have a limited budget and I will be very happy spotting a few ‘gems’ from the left-overs!
Thanks PropertySoul for the timely update.
When I read your post, I thought that it’s time to buy.
Yes, I agrees that more could be done by the developer and with our limited funds, we need to be very patient to get the best deal.
Like WB says: “What happens to the early worms that wake up early?”
Love Compassion
Thanks. You got exactly what I am trying to carry home!
With high land price aggressively bided by developers even for EC development close to $400psft in Sub urban area like in Jurong West, I doubt that there will a property GSS. Further, the building cost had also increased substantially in recent years and EC price is likely to be looking at $800psft or higher.
Sometimes the three things in a market ̶ seller’s cost, seller’s selling price, and price buyers are willing to pay ̶ can be totally unrelated. What price level buyers pay is determined by market mechanism. For examples,
1. Before the Qualifying Certificate restriction, a developer an acquire land at a low cost during the bad times and market the project at a high price when the market has picked up.
2. Some developers bought their land in prime districts at a high price during the last en bloc fever. Once market direction changes, it doesn’t matter whether they sell above or below cost, if there is low interest, there will still be few takers.
3. Big developers sell many projects and can afford to have lower profit, no profit or even a loss for individual projects. It is those smaller developers who calculated their numbers wrongly will run into troubles.
And, it will be most interesting to see the smaller developer default.
Only problem I see is, prior to default, the developer will cut-corners and we will get lots of problems.
I recall visited a condo build during the bad time.
The floor tile is lay so unevenly that it can cut one’s foot
easily.
Love Compassion
Thanks. You got exactly what I am trying to carry home!
Sometimes the three things in a market ̶ seller’s cost, seller’s selling price, and price buyers are willing to pay ̶ can be totally unrelated. What price level buyers pay is determined by market mechanism. For examples,
1. Before the Qualifying Certificate restriction, a developer an acquire land at a low cost during the bad times and market the project at a high price when the market has picked up.
2. Some developers bought their land in prime districts at a high price during the last en bloc fever. Once market direction changes, it doesn’t matter whether they sell above or below cost, if there is low interest, there will still be few takers.
3. Big developers sell many projects and can afford to have lower profit, no profit or even a loss for individual projects. It is those smaller developers who calculated their numbers wrongly will run into troubles.
And, it will be most interesting to see the smaller developer default.
Only problem I see is, prior to default, the developer will cut-corners and we will get lots of problems.
I recall visited a condo build during the bad time.
The floor tile is lay so unevenly that it can cut one’s foot
easily.
Love Compassion
I wonder how is the old condo resale value now? I’m sure they are really having difficulty on selling it out.
like what propertysoul shared during her “no BS” book launch.
what you see in the property index (PPI) consists of both new and old property prices.
an old condo resale value will dip faster than a new condo.
if you read today newspaper, instead of selling, most owner just let out their properties.
(of course, for those who can not hold on to their old house, then it’s a very painful and long process to sell).
When I talked to the property agents who deal with owners everyday, they told me that the resale market was already slowing down since 2013. This was not reported in the media then. They were too busy covering the new launches at that time.
I wonder how is the old condo resale value now? I’m sure they are really having difficulty on selling it out.
like what propertysoul shared during her “no BS” book launch.
what you see in the property index (PPI) consists of both new and old property prices.
an old condo resale value will dip faster than a new condo.
if you read today newspaper, instead of selling, most owner just let out their properties.
(of course, for those who can not hold on to their old house, then it’s a very painful and long process to sell).
When I talked to the property agents who deal with owners everyday, they told me that the resale market was already slowing down since 2013. This was not reported in the media then. They were too busy covering the new launches at that time.
I always believe property is a cyclical market. 2007 was the time when the property market begins to move up from the low. 2014 is the time when the property market starts to move down from the top. It may take a few years (6 to 7 years) before the property market ‘hits’ the bottom and flattens out before it starts to tilts up again.
With the huge supply in the market (9k+ in 2009, 10k+ in 2013, 12k+ in 2013, 13k+ in 2014, 25k+ in 2015 in 25k+ 2016) and the penalty for unsold units (penalty of 96% of land cost over 5 years, 8%+16%+24%+24%+24%…), developer will be ‘force’ to cut prices.
Agree. With fading enthusiasm from buyers, it is interesting to see how developers and sellers can find so many takers for their new and resale units. Every financial market is a cycle. I wonder whether the slowdown between 2001 and 2006 will repeat itself again.
Every market, financial, property, etc., is a cycle. I believe cyclical movement in a market is inevitable. It is a natural phenomenon of birth and dead. If the cyclical theory is to hold itself true, the slow down between 2001 and 2006 should repeat again. It would be interesting to see whether the new low be higher than the low in 2006. If the new low is going to be higher, how much higher.
You are absolutely right.
The PPI only reports the average transacted prices, that are skewed higher by the prices of new properties. Resale properties, especially old ones, are sold much lower.
In 2003, I managed to buy a resale property the same price as it was launched 19 years ago in 1984 when the property market was not even doing well in that year.
Who said you can’t find prices going back 15 or 20 years?
Agree. With fading enthusiasm from buyers, it is interesting to see how developers and sellers can find so many takers for their new and resale units. Every financial market is a cycle. I wonder whether the slowdown between 2001 and 2006 will repeat itself again.
Every market, financial, property, etc., is a cycle. I believe cyclical movement in a market is inevitable. It is a natural phenomenon of birth and dead. If the cyclical theory is to hold itself true, the slow down between 2001 and 2006 should repeat again. It would be interesting to see whether the new low be higher than the low in 2006. If the new low is going to be higher, how much higher.
You are absolutely right.
The PPI only reports the average transacted prices, that are skewed higher by the prices of new properties. Resale properties, especially old ones, are sold much lower.
In 2003, I managed to buy a resale property the same price as it was launched 19 years ago in 1984 when the property market was not even doing well in that year.
Who said you can’t find prices going back 15 or 20 years?
If PPI is skewed higher by the new prices, PPI may not be a good indicator. It may be better to look at the individual property price series.
2014 (high), 2007 (low), 2000 (high), 1993 (low), 1986 (high), 1981(low) …
According to the series above, you bought at a time when price was on its way down – 3 years away from the peak in 2000. The property was launched at a time when price was moving to the peak.
Without checking the details, i would assume that the property was launched at a time when the general property price level were rising close to the peak in 1986. After slightly more than one complete cycle (14+ years), its price went down to its launch price level! If this were to repeat itself, there is a possibility for your sold property to return to the price level of 2003.
If PPI is skewed higher by the new prices, PPI may not be a good indicator. It may be better to look at the individual property price series.
2014 (high), 2007 (low), 2000 (high), 1993 (low), 1986 (high), 1981(low) …
According to the series above, you bought at a time when price was on its way down – 3 years away from the peak in 2000. The property was launched at a time when price was moving to the peak.
Without checking the details, i would assume that the property was launched at a time when the general property price level were rising close to the peak in 1986. After slightly more than one complete cycle (14+ years), its price went down to its launch price level! If this were to repeat itself, there is a possibility for your sold property to return to the price level of 2003.
Is it advisable to cash out by selling my only flat now and rent a place to stay while waiting for the price to correct further. But the problem is no one knows how long is the wait. Otherwise unable to sell high and buy low later ?
If you have only one property, it is not a good idea to sell and rent a place to stay. The buy and sell thingy is to capitalize on capital gain for investment properties.
Is it advisable to cash out by selling my only flat now and rent a place to stay while waiting for the price to correct further. But the problem is no one knows how long is the wait. Otherwise unable to sell high and buy low later ?
If you have only one property, it is not a good idea to sell and rent a place to stay. The buy and sell thingy is to capitalize on capital gain for investment properties.
Some sold their HDB at recent high price before the new mass supply of new HDB are ready, to buy EC or private condo in the recent years. It seems that they sell high but also buy at high price for the second home. What are your views on this strategy ?
Sell high buy high – that’s what many people are doing. That’s why it is difficult to make a profit from your home. In properties, always separate your home with your investment.
Some sold their HDB at recent high price before the new mass supply of new HDB are ready, to buy EC or private condo in the recent years. It seems that they sell high but also buy at high price for the second home. What are your views on this strategy ?
Sell high buy high – that’s what many people are doing. That’s why it is difficult to make a profit from your home. In properties, always separate your home with your investment.
Thanks for your sharing and John’s sharing earlier on. It helps us to be more aware.
Thanks for your sharing and John’s sharing earlier on. It helps us to be more aware.
Thank you for the above posts. Its educational. I spent my lunch indoors during hazy times to read your educational blog
Thank you for the above posts. Its educational. I spent my lunch indoors during hazy times to read your educational blog
Vue 8, worth to buy it now? Or wait?
Sorry I don’t recommend individual property projects. Please read all my posts in this blog and make your own decision.
Vue 8, worth to buy it now? Or wait?
Sorry I don’t recommend individual property projects. Please read all my posts in this blog and make your own decision.