Increasing land supply is ineffective in controlling property prices

[Leeds]

Increasing land supply ineffective in controlling property prices: analysts
By Lynda Hong | Posted: 20 April 2012 2235 hrs



SINGAPORE: Increasing the supply of land as part of the government land sales programme may no longer be effective to control property prices.

This according to analysts who say that developers are becoming more creative in developing hot selling projects.

It also means that property prices may continue to remain high due to strong demand for such projects.

The government's latest release of six sites for residential development are expected to generate strong interest from developers.

Last year, a record number of 35 land parcels for private residences were put out for sale by the government.

But increasing the supply of land may not cap property prices.

Nicholas Mak, executive director, Research, SLP International, said: "Developers through their innovative design and so on, are increasing the elasticity of demand. In other words, whatever the government can push out, developers are able to absorb that supply and turn them into new products which the market is buying up.

"So the policy of trying to stabilise prices or reducing prices by pushing out more land parcels is actually not working out as initially planned."

Record sales of residential properties in recent months have also boosted developers' confidence.

Analysts said developers are now willing to bid higher for choice sites.

Analysts believe the site at Buangkok Drive will attract seven to 12 bidders. Its locality being just a walk away from Buangkok MRT station should draw bids of between S$190 and S$240 million.

While the six sites are estimated to yield 2,380 units, this number could turn out higher.

This is because the developer could shrink the size of a unit to make space for more units in a development in order to offset the pricier piece of land.

Demand is forecast to remain high, thanks to low borrowing costs and aspirations of HDB upgraders.

Lee Sze Teck, senior research manager, DWG, said: "Generally developers are still positive about the property market because they feel that people still want to upgrade, (and) move into a private condominium residential unit."

Experts also noted that policy risks like the recent cooling measures could also push both developers and buyers to quickly make hay while the sun shines - before another round of cooling measures dampen the market.

- CNA/cc

[price]

If you own all the land in SG, will u sell during high price or low? simple logic why they releasing so many plots of land now.

[Akira Fudou]

If you own all the land in SG, will u sell during high price or low? simple logic why they releasing so many plots of land now.

agreed totally

[kane]

To control prices, you need to increase supply by an amount more than demand.

[hopeful]

government damn greedy, sell so much land.
then the green spaces run out how?

government can increase plot ratio, then it is private citizens/companies who earn via enbloc. instead, government reduce the green spaces that make up green singapore.

[price]

To control prices, you need to increase supply by an amount more than demand.

While hoping to reduce demand, cash in at highest price

[radha08]

god bless singapore......future

[chiaberry]

government damn greedy, sell so much land.
then the green spaces run out how?

government can increase plot ratio, then it is private citizens/companies who earn via enbloc. instead, government reduce the green spaces that make up green singapore.

I agree with you totally. They should take measures to encourage en bloc and increase plot ratios. This will release land back to be redeveloped. It is more environmentally friendly than releasing new land. Please could somebody go and lobby on KBW and PM's blogs.

[Leeds]

Since increase in land supply does not quite curb prices, the next round of CM should be curbing demand such as capital gain tax, tax on 2nd and more property etc etc.

[Allthepies]

To really increase the immediate supply to meet the demand from buyers, the government should disallow multiple ownership for hdb and private. So many hdb are being rented out don't flame me hor, this is for the general good of the country

Really we rich people should not rent out our HDBs, just released them back to the market. Some sort of social responsibilities.

[Allthepies]

Since increase in land supply does not quite curb prices, the next round of CM should be curbing demand such as capital gain tax, tax on 2nd and more property etc etc.

The problem really is in the shortage of hdb, one cause is due to under built for the past few years, another cause is many hdb are being held for investment rental purpose.

[august]

To control prices, you need to increase supply by an amount more than demand.

debt-assisted demand is not genuine demand

[DKSG]

The problem really is in the shortage of hdb, one cause is due to under built for the past few years, another cause is many hdb are being held for investment rental purpose.

I agree! The next measure should be targetted at the current loophole - People who own HDB AND PC. These people should be given 12 months to dispose their HDB or PC(s).

This is reduce the amount of hogging of subsidised housing.

I never understand government's stand on this, why do they allow people to own HDB and PC and worse still allow the HDB to be rented out ?

With or without the 5 years MOP, there should be a line drawn.

Those owning HDB and PC now are hurting poor folks who are trying to get their HDB flats.

I hope the government can seriously look into this flaw.

DKSG

[chiaberry]

Singapore still needs foreign workers in service industries (especially healthcare) as no matter what there are not enough locals who want to do the jobs. Foreign workers need affordable places to rent. Thus HDB owners who rent out their flats are filling this need. If reduce the number of HDB available for rental, how to accomodate these foreign workers? (I am telling you that in healthcare we really need them).

[DKSG]

Singapore still needs foreign workers in service industries (especially healthcare) as no matter what there are not enough locals who want to do the jobs. Foreign workers need affordable places to rent. Thus HDB owners who rent out their flats are filling this need. If reduce the number of HDB available for rental, how to accomodate these foreign workers? (I am telling you that in healthcare we really need them).

We are talking abt different things, the same HDB will still be there. But it can be owned by a newly wed local.

So who takes priority ? A newly wed local couple or foreign workers providing cheap labour ?

This is the same foreign worker that is depressing out local's pay leh!

I advocate that locals should be paid more to become nurses, health care providers. And keep the foreigners out as much as possible.

Locals comes first. It is ok that locals are paid double that of foreigners.

DKSG

[chiaberry]

Govt are flooding the market with new BTOs to cater to newly-wed couples. I agree that healthcare workers should be paid more but if we double their pay are YOU as a consumer willing to pay DOUBLE for your medical care? The biggest cost to healthcare providers is manpower costs so you would not expect the govt or private healthcare providers to absorb all of the additional costs...in the end the cost will pass down to you as a consumer.

Don't think that the professional foreigners are necessarily being paid less than locals hor. There are levies etc and we have to stick to market rate. We don't necessarily have a separate market rate for foreigners vs locals (anyway not where I work). It depends on their qualifications and experience.

[kane]

debt-assisted demand is not genuine demand

tell that to the central banks who are printing like no tomorrow.

until the day the G3 central banks suck out the liquidity from the market, debt assisted demand will remain as the demand driver for prices. and by the time they do that, there is a possibility that fiat money might be worth much less than what it is today.

[rattydrama]

Govt are flooding the market with new BTOs to cater to newly-wed couples. I agree that healthcare workers should be paid more but if we double their pay are YOU as a consumer willing to pay DOUBLE for your medical care? The biggest cost to healthcare providers is manpower costs so you would not expect the govt or private healthcare providers to absorb all of the additional costs...in the end the cost will pass down to you as a consumer.

Don't think that the professional foreigners are necessarily being paid less than locals hor. There are levies etc and we have to stick to market rate. We don't necessarily have a separate market rate for foreigners vs locals (anyway not where I work). It depends on their qualifications and experience.

hospitalised medical insurance premiums sure going to go up up up and up..... and medical insurance is more difficult to buy these days with lots of questionaires and declaratin to make.

[rattydrama]

tell that to the central banks who are printing like no tomorrow.

until the day the G3 central banks suck out the liquidity from the market, debt assisted demand will remain as the demand driver for prices. and by the time they do that, there is a possibility that fiat money might be worth much less than what it is today.

my swiss fren, a vivid traveller to almost 42 countries told me that Singapore is the best in asia and maybe the world, after swiss. The growth engine is in asia and our environment is safe for stay and tax is low.

He is thinking of buying a house here cos no additional 10% tax.

We are unheard of to most of the people 10 years ago..

People just buy on sendiments and confidnece in our country. I think our policy and strong enconomy support our ppty price. For OCR, its the pen-up demand from the upgraders.

Wait till confidence level drop, we will see the real roller-coaster.

[chiaberry]

There could be some serious consequences for the property market in Singapore if people were not allowed to hold HDB and private. It is this group who are propping up the market now that foreigners are being deterred by ABSD. If Govt disallows the co-ownership of HDB and private and for the rentals to help pay for the private condo, then the number of local Singaporeans who would purchase private property would plunge. That would be the mother of CMs.

[focus]

The problem is not the lack of HDB.
The problem is the increase in the HDB values and the ongoing boom years for property which made more locals drawn into the ppty investment game.

Anyway, looking at the ppty ads with discounts and % of units sold for most new launches... it seems there is already a plateau reached.

I don't think I want to buy any now.

[radha08]

in summary whole property mkt is in a mess....

[rattydrama]

the problem also with the mindset of proud to becomes a private property owner.

so far houses purchased during 2005-2010 should not have any cash flow issues.

[latour]

in summary whole property mkt is in a mess....

At the moment and the near future it seems like it. However some points to ponder over are; mess seems to be heating up in OCR, 6.x mil population eventually, govt's act is in the interest of public housing and has to be, selling land at high price is not wrong, developers are still bidding, developers/builders are more 'innovative', demand is still there, economy is looking neutral, low interest seems to have still some years to run. ...

[kane]

There could be some serious consequences for the property market in Singapore if people were not allowed to hold HDB and private. It is this group who are propping up the market now that foreigners are being deterred by ABSD. If Govt disallows the co-ownership of HDB and private and for the rentals to help pay for the private condo, then the number of local Singaporeans who would purchase private property would plunge. That would be the mother of CMs.

Not just pte, but hdb prices will also plunge.

[august]

There could be some serious consequences for the property market in Singapore if people were not allowed to hold HDB and private. It is this group who are propping up the market now that foreigners are being deterred by ABSD. If Govt disallows the co-ownership of HDB and private and for the rentals to help pay for the private condo, then the number of local Singaporeans who would purchase private property would plunge. That would be the mother of CMs.

one of the CM forbids private owner from buying hdb... right then there was an opportunity to restrict hdb owners - if buy private must dispose hdb within a certain time frame. The opportunity came and went. hence today we have a bigger bubble in OCR than ever.

[carbuncle]

one of the CM forbids private owner from buying hdb... right then there was an opportunity to restrict hdb owners - if buy private must dispose hdb within a certain time frame. The opportunity came and went. hence today we have a bigger bubble in OCR than ever.

Perfect example of one step forward, two steps backward policy making...

[DKSG]

The problem with implementing buying PC must sell HDB is that those upgraders has no place to stay during the construction phase.

This problem can be resolved by tweaking the selling date to be within 6 months after getting keys. And this ruling should apply to EVERYONE who has not gotten keys yet.

Those owning both now should be given 12 months (or 18 months depending on circumstances or approved on a case by case basis) (oh gosh! I am sounds like Mr K!) to sell.

Dear Minister, if you are reading this, hopefully you can see where we coming from.

DKSG

[DKSG]

The problem with implementing buying PC must sell HDB is that those upgraders has no place to stay during the construction phase.

This problem can be resolved by tweaking the selling date to be within 6 months after getting keys. And this ruling should apply to EVERYONE who has not gotten keys yet.

Those owning both now should be given 12 months (or 18 months depending on circumstances or approved on a case by case basis) (oh gosh! I am sounds like Mr K!) to sell.

Dear Minister, if you are reading this, hopefully you can see where we coming from.

DKSG

But dont worry, this segment of people is not significant enough to crash the market by 30%, maybe a 10% dip is possible. Sorry Ah B, couldnt help you achieve your intended 50% dip.

[richwang]

If you take a walk opposite Pasir Laba Camp near Joo Koon, you can see a whole cluster of fenced apartments.
They are rented out for foreign workers.

HDB should be strictly for own stay.

Thanks,
Richard