The recent spate of en-bloc sales does not necessarily translate to higher prices, National Development Minister Lawrence Wong claimed in parliament on Monday.
This is because the market is subjected to supply and demand in the market.
Developers are subjected to an Additional Buyer’s Stamp Duty (ABSD) if they do not build and sell new units within five years after the site is being awarded. The ABSD is an additional 15 per cent of the site’s purchase price.
According to Mr Wong, such a measure ensure developers price their projects reasonably.
En-bloc sites being taken off the market will also be put up for sale within the next one to two years, which will increase the supply in the market and ‘put some moderating pressure on prices down the road’.
Up till now, about 2,700 private residential units have been sold en-bloc in 2017, more than four times the number since last year.
Mr Wong offered Sembawang GRC member of parliament Lim Wee Kiak two reasons for the increase in en-bloc units as developers keen to replenish their land banks and successful en bloc sales have encouraged more owners of ageing residential projects to monetise their assets.
There are currently 17,200 unsold units, down from 40,000 in 2012, he said.
Mr Wong also mentioned that the government is considering several factors before deciding on the Government Land Sales(GLS) before deciding to increase the supply of land on subsequent GLS.
9,300 new units is likely to be generated from the recent en-bloc sites sold since last year.
Together with an estimated 7,400 units which is coming from the awarded Government Land Sales site, the bulk of this new supply of 16,700 could be completed by 2021 onwards.
The GLS is updated every half-yearly with a confirmed list and a reserve list. A confirmed list consists of sites which will be released for sale within the next six months and a reserve list is only triggered when there is sufficient demand from developers.
The details of the GLS programme for the first half of 2018 will be announced soon.
The government will continue to monitor new trends and will take appropriate actions to maintain a stable and sustainable property market.
Adapted from: The Business Times, 7 November 2017