What underpins home demand at developer sales

Recent private home buying has focused on developer sales, particularly those for suburban condominiums. The focus is driven by financial considerations and innovative product designs.

Developer sales can be significantly pricier than resale homes in the vicinity but may still be attractive because of the progress payment schemes where mortgage financing is effective only when the project is completed, whereas a resale property requires one to commit immediately.

Shoebox apartments have a special place among buyers who are single. Many such apartments were purchased directly from developers – meeting the preference among the younger, economically active buyers for future payments.

For shoebox units which will be completed this year and the first half of next year, the bulk may have been bought without the sellers’ stamp duty and hence may be priced attractively in the resale market.

Special project designs have been successful in wooing buyers, with buyers willing to pay a premium of 10 to 20 per cent to resale properties in the vicinity, depending on the age of the completed properties.

Resale segment has its own attractions

Resale properties that are priced attractively will be able to woo buyers who have financing power. Interestingly, such buyers are the ones who ultimately purchase at lower prices. Resale properties can be a long-term investment gem and may allow the investor to top up his overall wealth faster than the rest.

Buyers of fairly new resale properties in convenient locations or tried-and-tested developments can also feel safer than buying new properties in far-flung locations, although many new places may present exciting growth opportunities in the long term.

A persistent dichotomy in the resale and developer segments will mean that resale properties that have average concepts will cater to practical but financially-ready buyers, whereas creatively-designed developer projects will have a role in continual product innovation in Singapore’s mature housing market.

Source : Today – 27 Apr 2012