SINGAPORE: About 3,000 visitors flocked to the opening day preview for private project The Tre Ver in Potong Pasir on Saturday (Jul 21), just two weeks after higher stamp duties and tighter loan limits were introduced.
Units at the 729-unit condominium, which will be completed in 2022, are priced from around S$1,400 psf. But even with the tighter loan-to-value limits, homebuyers Channel NewsAsia spoke to were not deterred.
Interested homebuyer Eric Kon said that he thought the pricing was "reasonable" and "worth it to buy".
Another homebuyer said that despite the cooling measures, she would still go ahead to buy a property, after selling off her current home.
The 201,405-sq-ft project is just a stone's throw away from Park Colonial's showroom, where buyers have snapped up half of the units available since Jul 5, when the surprise cooling measures were announced. Channel NewsAsia understands that Park Colonial closed its showflat on Jul 15 to "reconsolidate".
Such sentiments go against the gloomy outlook from the Real Estate Developers' Association of Singapore (REDAS), whose president Augustine Tan has warned that the cooling measures could worsen the oversupply of private residential units.
According to data from the Urban Redevelopment Authority and JLL Singapore, an estimated 50,526 unsold private units are projected to come on stream in the coming years, including projects that have and have not been granted planning approvals, as well as all Government Land Sales and collective sales sites sold up to June this year.
But one analyst Channel NewsAsia spoke to said this number may not be a cause for alarm - as long as developers space out their launches before their five-year deadline to offload unsold units.
"We believe a lot of our developers have deep pockets and are able to sustain some delay in launches as we’ve seen in the past," said Ms Tay Huey Ying, head of Singapore research at JLL Singapore.
"Developers would have a tendency to want to spread out launches over a longer period of time to tap demand over different periods of time, as well as to release units in smaller quantities to test the market in terms of pricing."
According to data compiled by JLL, an average of 12,159 units were sold annually by developers over the past decade. Based on the estimated unsold supply, about 12,632 units could be released for sale annually between 2018 and 2022 if launches from the current unsold supply are paced out.
Private home sales are estimated at about 8,000 to 9,000 this year.
This means future supply would be able to adequately meet current and future demand, Ms Tay said. "The sales volume that developers saw last year was suppressed by low launch supply, and this is why we saw thousands of people flocking the showflats on the night of Jul 5."
"That just shows the extent of liquidity and pent-up demand that there is in the market," she added.
HOME PRICES LIKELY TO REMAIN RESILIENT: ECONOMIST
In light of steady economic growth, rising wealth, and a healthy employment market, one economist believes that home prices are likely to remain resilient.
"The overall gross domestic product (GDP) was graded 3.6 per cent (in 2017) - that's the strongest that we’ve seen in the last couple of years," said UOB economist Francis Tan.
"In 2011, if you put S$100 into a Singapore private residential property, your S$100 today in 2018 will give you around S$102. So there’s only a very small appreciation of S$2 across so many years.
"On the other hand, if you put your S$100 in a city like Auckland for example, that will reach S$195 – you will see appreciation. And if you put it in a city like KL you will see S$185," Mr Tan said.
"What that means is that compared across time and cities, private residential property prices in Singapore hasn’t really gone up by that much compared to major cities around the world now," Mr Tan explained.
According to Mr Tan, homebuyers in Singapore have been "relatively sheltered" from rising home prices, due to the total debt servicing ratio framework (TDSR) introduced in 2013.
"In Singapore, a typical or average homeowner will see a debt servicing ratio of around 22 per cent," said Mr Tan. "What that means is that for every S$100 of monthly income that a household brings in, around S$22 goes to servicing the home loan.
"If you compare this today with the situation in Hong Kong, a typical Hong Kong household will see the debt servicing ratio at 67 per cent – what that means is that for every S$100, S$67 goes to the bank in paying down the home loan."
"If it’s real demand for occupying space, I think certainly a good time to enter market," Mr Tan said. "But in terms of investment, the Government has signalled clearly it wants to deter investment or speculative flows into the market … so it will be a lot more tougher and painful for investors’ pockets to enter."
However, analysts says risks remain, including escalating US-China trade tensions and continued interest rate hikes by the US Federal Reserve, as well as further government intervention if home prices continue to rise above 3 per cent every quarter.
But barring these external headwinds, there may be another bright spot for the housing market ahead.
"Moving forward, given that the Government is intent on keeping home price increase in tandem with economic fundamentals, we are looking into the future where home prices could potentially grow by 3 to 4 per cent per annum," Ms Tay said.