Property developers are dangling freebies and other enticements to tempt buyers amid an increasingly competitive market awash with new launches according to the Straits Times article:
"The offerings range from steep developer discounts and stamp duty reimbursements to rebate incentives for people living in the vicinity of the new project.
A check on seven upcoming condominiums found that total discounts could slice about 20 per cent off a unit's listed price."
Source : Firms dangle perks to draw condo buyers
All property indexes including the URA's are based on the caveats lodged and these freebies and discounts do not affect this number. So although the property may be bought with lets say 20 percent effective discount, the lodged price of the unit will still be with the original list price.
An example is given by the same article:
"At Tuan Sing's Seletar Park Residence in Seletar Road, there is a three-tier discount of 10 per cent plus 3 per cent plus 3 per cent" off the gross price. The average price after discount would be about $1,200 psf, pricing 969 sq ft two-bedder at around $1.2 million, down from $1.55 million."
This translates into a 22 per cent fall in the price but it will not be reflected to any property price index because the caveat will be lodged on 1.55 million although the buyer effectively pays 22 percent less. So although indexes are not reflecting it, the property prices may already be sharply falling due to this small trick by developers.
Developers will go to these tricks because Singapore property market is driven half buy fundamentals and half buy sentiment and beliefs. The strong belief of "whatever happens Singapore property prices do not go down" is one of the main driver pulling people to the market to buy before it is too late(!). Price declines in the indexes will be something developers will do their best to avoid.
"The offerings range from steep developer discounts and stamp duty reimbursements to rebate incentives for people living in the vicinity of the new project.
A check on seven upcoming condominiums found that total discounts could slice about 20 per cent off a unit's listed price."
Source : Firms dangle perks to draw condo buyers
All property indexes including the URA's are based on the caveats lodged and these freebies and discounts do not affect this number. So although the property may be bought with lets say 20 percent effective discount, the lodged price of the unit will still be with the original list price.
An example is given by the same article:
"At Tuan Sing's Seletar Park Residence in Seletar Road, there is a three-tier discount of 10 per cent plus 3 per cent plus 3 per cent" off the gross price. The average price after discount would be about $1,200 psf, pricing 969 sq ft two-bedder at around $1.2 million, down from $1.55 million."
This translates into a 22 per cent fall in the price but it will not be reflected to any property price index because the caveat will be lodged on 1.55 million although the buyer effectively pays 22 percent less. So although indexes are not reflecting it, the property prices may already be sharply falling due to this small trick by developers.
Developers will go to these tricks because Singapore property market is driven half buy fundamentals and half buy sentiment and beliefs. The strong belief of "whatever happens Singapore property prices do not go down" is one of the main driver pulling people to the market to buy before it is too late(!). Price declines in the indexes will be something developers will do their best to avoid.
Disclaimer
This blog article is to provide general information only and should not be treated as an invitation to buy or sell any property or as sales material. Users of this report should consider this report as a one of the many factors in making their investment decision. Users should make reference to other sources of information and specific investment advice to obtain a more objective view of the property market. Asia Singapore shall not be responsible for losses suffered.
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