News: Hike in private home prices does not allude to a buoyant market

Oct 11, 2019

Experts at Edmund Tie & Company noted that higher land prices, declining average sell-down rates and compressing developer’s margin show that the market isn’t as ‘buoyant’ like it appears.

While private residential prices appeared to have diverged from economic fundamentals as it continued to increase for the second consecutive quarter in Q3 2019, this does not allude to a buoyant market, according to Edmund Tie & Company’s latest report.

This comes as various factors, including higher land costs, declining average sell-down rates and compressing developer’s margin, have to be taken into consideration also.

The Urban Redevelopment Authority (URA) flash estimates showed that private non-landed prices for Q3 2019 increased 1.7 percent quarter-on-quarter vis-à-vis 2.0 percent in the previous quarter.

In negating that the market is buoyant, the property consultancy firm noted that prices of new units tend to be higher compared to resale units, especially after taking into account the higher land prices that developers paid during the en bloc fever.

“Consequently, the higher proportion of new sale volume vis-à-vis resale would result in higher prices, all else being equal,” said Edmund Tie & Company.

“Additionally, our analysis shows that land cost as a percentage of average selling price has been trending upwards, which means that developers’ margins are likely compressing.”

The estimated average sell-down rates of projects have also been on the downtrend.

In fact, the 41 new projects launched since the start of the year registered an average sell-down rate of around 27 percent, which is lower compared to the average sell-down rate achieved for the new projects launched 12 months before the introduction of cooling measures in July 2018 at 47 percent.

“Furthermore, the number of new launches and units were substantially lower than the first three quarters of this year. Hence, this does not suggest that the market is ‘buoyant’,” added the report.

With this, Edmund Tie & Company expects overall unit prices to increase between two percent and four percent this year, barring any economic shocks.


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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email

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