When everyone is busy with Christmas shopping and year-end travels, developers are trying one last shot to clear as many units as possible from their new launch projects before Christmas.
Over the weekend, City Developments targeted young families with workshops for kids at Whistler Grand and The Tapestry sales galleries. The advertisement of Whistler Grand said units are “irresistibly priced from $1,239 psf” - a 10 percent discount from the launch price of $1,380 psf.
Over at Daintree Residence sales gallery, Setia offered free lunch and baking demonstration to draw visitors. The developer is also giving away $318,000 as lucky draw prize.
At the Affinity at Serangoon sales gallery, apart from a feng shui talk, Oxley tried to fill the stomachs of potential buyers with famous food in Serangoon.
How many will be tempted by the adjusted prices and marketing gimmicks to buy at this time?
New projects sold cheaper after cooling measures
In an August article, TODAY revealed that “developments launched before the cooling measures were making price cuts to boost sales”. New projects are now launched at lower prices by 5 to 10 percent. Some of them include:
1) Daintree Residence offered a 5 percent discount at an average price of $1,710 psf.
2) For Affinity At Serangoon, Oxley Holdings offered discounts of 5 percent for one-bedroom units and 7 percent for two-bedroom units.
3) The Tre Ver was sold at an average transacted price of $1,550 psf and 11.4 percent lower than nearby competitor Park Colonial.
On that fateful evening of July 5, Park Colonial was launched at an average price of S$1,730 psf, well above estimated breakeven price of $1,600 psf. Developer Chip Eng Seng said they managed to move 310 of 805 units or 38.5 percent of total units in one night.
Remember the desperate buyers under panic attack of FOMO flocked to the yet-to-be-ready showflats? Remember the herd who were pressed for last-minute shopping the night before the new ABSD and loan-to-value rules kicked in? How would these early birds feel now?
Well, they say you have to pay for the price of one-night stand. It seems this also applies to one-night sale.
A quick check on URA’s private residential property transactions shows that Christmas comes early for Affinity At Serangoon.
In June, 474 sq ft Type A1 1-bedroom units on level 6 to 10 were transacted on average at $1,679 psf. In November, same size units on same levels were transacted on average at $1,484 psf. What a wonderful 12 percent discount!
In June, a 624 sq ft Type BS1 2-bedroom unit on high floors of level 11 to 15 was sold at $1,797 psf. In September, the average transacted price of same size units on same levels was only $1,525 psf. That is an amazing 15 percent off!
Should buyers quickly go and snap up some year-end bargains? Wait. Who can guarantee that next year there won’t be better Chinese New Year offers at even bigger discounts?
“We are projecting price growth to range between -3% to 2% as slower economic growth and the deluge of new launches may act as a dampener on home prices … The time to market would be critical for developers to beat the potential buyer fatigue.”
Yes, time to market is critical. New units have to change hands fast before the music stops playing.
No one wants to buy at the wrong time
Every day we are bombarded with overused phrases, including “any time is a good time to buy”, “property prices will always go higher”, “buy now before prices go up again”, “you can’t time the market”, ...
Do you know that people who tell you “no one can time the market” ether don’t want to lose your business, or they themselves don’t know how?
But they can’t doesn’t mean everybody can’t.
In my last blog post “Property investment is all about timing”, I mentioned how Hong Kong property tycoon Li Ka-shing kissed his property portfolios goodbye at the perfect time.
Amateur home buyers like us may not know how to time the market. Frankly, I don’t think anyone bothers to time it for the best time to buy. But no one wants to buy at the worst time and end up in deep shit.
We are all ordinary salary earners and business owners who can’t work forever. How long can we afford to be stuck with a property bought at the wrong time?
Think buyers who bought at the peak of the mid-1990s, who took almost 20 years to breakeven. How many ten years do we have in a lifetime?
Next time when your property agent tells you that any time is a good time to buy, remember to ask him/her to split the commission. It can be 50-50 sharing or at least a fair share of the amount.
Why not? According to a Bloomberg article, US builders are now giving away free vacations and $100,000 discount to buyers. Real estate brokers are rebating to customers all but $750 or $1,000 of their commission for every sale.
Why developers like Singapore home buyers
Remember I wrote in my blog post “4 major concerns over Oxley’s game plan”, the CEO of Oxley Holdings lamented that it is not easy being a developer overseas? In the past few years, Oxley faced many hardships overseas and they missed their friendly home in Singapore.
I fully agree with the CEO’s heartfelt comments, for two main reasons:
1. Singaporeans have a love affair with properties
As I mentioned in my earlier post “When home ownership is a religion”, “home ownership is our state religion and national doctrine. Singaporeans worship properties and believe that it is the only way to preserve our wealth”.
We have a home ownership rate as high as 90 percent. We see renting as a waste of money. We dream about upgrading our homes all the time. We are willing to pay top price for two single items: properties and cars.
Above all, we have a conducive environment for property purchase: a stable government, not-too-bad economy, high employment, high saving rate, low tax rate and compulsory pension.
2. Singapore buyers don’t mind paying a lot upfront
You might think most people prefer to keep their money in their own pockets rather than with others. But not for Singaporeans. Especially when it comes to buying properties.
With a responsible government, it is our culture to be gullible.
We hand our blank cheque to our property agent for balloting as requested. We are willing to pay a lot upfront to the developer well before we get to enjoy our purchase. We follow the payment schedule obligingly even before we see the final product.
This doesn’t happen in most countries. Buyers will not let their developer collect 20 percent from them within 8 weeks from the option date, nor follow a progressive payments till project completion.
For instance, as a deposit for off-plan properties, UK buyers only pay maximum £100,000 or 10 percent of the property’s price (whichever is lower). Buyers will ask: What if the developer goes bankrupt and the project is aborted half-way? What if prices slump before completion and the bank doesn’t grant me the original loan approved?
Cultural differences: Singapore vs China
There is a third reason.
Have you heard about the Right Protection Movement (维权运动) in China? It is a legitimate campaign for fellow buyers to protect their own rights.
With the slowdown of China’s property market, local developers are offering big discounts up to 30 percent to attract new buyers. Unhappy early buyers who bought the same project at much higher prices gathered at the sales galleries to drive potential buyers away. They forced developers to rebate them the price difference. Some requested for full refund.
When developers refused to do so, the angry mobs damaged the showflats and attacked the agents there. When the developers called the police for help, for fear that the situation would get out of control, the police put pressure on the developers to give way to dissatisfied buyers. They said it makes sense to give something back from the big profits they earned earlier.
Same for poor building quality. Remember how owners of Country Garden projects started a nationwide “Country Garden Owners’ Rights Protection Movement”? In July, over 400 buyers protested outside Country Garden’s sales office in Nanjing.
Singapore buyers are much more “reasonable”. When we know that developers lowered prices, we would only lament that we are just being unlucky. We have already signed the Sales & Purchase Agreement. What can we do?
Same for developer defects. At most owners would request the developer to rectify the defects at no cost within the one-year warranty period. Afterwards, fixing defects would come out from our own cost. We have already paid the developer in full. What else can we do?
For things China buyers think it is unfair, Singapore buyers think it is bad luck. Singaporeans will do what we are told. The Chinese will not let you go if they find anything they haven't been told.
Just observe how pedestrians cross the roads in the two countries: Singaporeans follow rules and look out for traffic lights and pedestrian crossings. The Chinese can cross the roads anytime anywhere. Once they gather enough pedestrians to cross together, cars have to give way to them.
In China, laws and rules are for reference only. Instead of wasting time and money to find a lawyer, they gather a crowd together to justify their rights and demand for compensations.
In Singapore, there are rules and regulations. Unlawful assembly and public demonstrations are illegal. Any injustice can complain to the relevant authority, or ask for help from the MP. Then sit back and wait for an answer.
All developers and their uncompleted new launch projects in Singapore are governed by the URA guidelines. But when Singaporeans venture overseas to buy foreign properties, we are on our own.
It is not surprising that Singaporeans are the best customers in the eyes of local and overseas developers. Are you one of them?