In the 1H2017 government land sales (GLS) programme, we’ve witnessed a couple of record-breaking land prices and high number of participating developers for sites in the suburban region, which are zoned for residential usage.
One of the significant land tenders with the most number participating bids was the Toh Tuck Road GLS site, which attracted a total of 24 bids from various property developers – surpassing the record of 23 bids being received for the 60-year leasehold site at Jalan Jurong Kechil (currently known as The Hillford) back in 2012.
As for the overall land price, the land tender of the site at Stirling Road received a whopping bid of more than $1 billion – which is the highest ever for a GLS land parcel that is solely used for developing residential homes.
The higher bid amounts for land parcels are probably spurred by the high volume of sales in both 2016 and 2017 (to-date). By the end of the year 2016, a total number of 16,378 private homes were transacted – which was a 16% year-on-year (y-o-y) increase.
The transaction volume for private homes continues to surge upwards this year, with 12,107 units being sold by the end of the 1st half of the year 2017 – a 64% increase when compared to the 1st half of the year 2016.
While some market watchers mentioned that the improved sentiments in the property market were due to the tweaks of the property cooling measures earlier this year, the adjustment of the seller’s stamp duties (SSD) has probably just a marginal impact.
However, it does show that the changes made in the cooling measures and with the decreasing number of unsold private homes have helped to elevate market sentiments significantly.
Since the 4th quarter of 2011, there were a total of 39,184 uncompleted units still left unsold and has gradually decreased to 15,085 to-date.
While the high bids received for land tenders may seem to have rejuvenated the property market scene, they have also reflected the value and importance of their locations, and most of the land parcels released under the 1st half and 2nd half GLS programme were situated in strategic and established locations.
For instance, the Toh Tuck Road site is situated conveniently near Woodlands Checkpoint, the current Jurong Gateway (earmarked as Singapore’s 2nd Central Business District), various established educational institutes and also the new Beauty World MRT Station (running along the Downtown MRT Line).
As for the site at Stirling Road, it is situated very close to Commonwealth MRT Station and it’s also a short drive to Central Business District. It’s been forecasted that the proposed new launch project in future will likely to have very little competition as most of the existing projects in the precinct (such as Commonwealth Towers and Queens Peak) would have already sold off a majority of their units by then.
Naturally, higher land prices do act as a signal or benchmark for further private home prices as property developers secure their bids based on the analysis of price movements 9 to 15 months down the road and it will also help boost activities and transactions within these areas.
One example would be the Stirling Road GLS, which helped generate more inquiries and sales for the nearby Commonwealth Towers as property buyers appear more conscious of the potential in the area.
Higher land prices have also helped trigger an ongoing en bloc fever, with more homeowners of older projects looking to capitalize on the opportunity for a lucrative payout or profit.
Rising number of property sales is likely to be a forerunner for escalating home prices, based on trends and property experts have suggested that prices are likely to increase by the year 2018.
However, they have also cautioned that external economic and political conditions have remained uncertain and there are still property cooling measures in place, which may still keep property prices at bay as it will possess a significant risk to interest rates and a correction in asset prices (which includes real estate).
Thus, it will still be wise for property buyers to remain mindful and vigilant of their own capacity to service their mortgage repayments in the event if interest rates spike.