Surge in en bloc sales may not mean higher prices: Lawrence Wong

SINGAPORE: The recent surge in en bloc sales may not translate into higher sale prices down the road, said National Development Minister Lawrence Wong in Paliament on Monday (Nov 6).

Around 2,700 existing private residential units have been sold en bloc in 2017 to date. This surge – from 600 units in 2016 – can be attributed to two factors: More developers are keen to replenish their land banks, and the effect of successful sales the year before, said Mr Wong.

In early October, former Government housing project Normanton Park was sold for S$830.1 million – the highest land rate this year for a 99-year leasehold collective sale site. The day before, Amber Park condominium set a record for Singapore’s largest freehold collective sale by dollar value, at S$906.7 million. And Tampines Court was sold in August for S$970 million – the highest for a former HUDC property since 2007.

“There has been a healthy increase in the sales of new units in the first three quarters of the year, which in turn means that the unsold supply in the pipeline has come down,” he explained. “To illustrate, there are about 17,200 units as at the third quarter of 2017, and that’s down from about 40,000 units in 2012.”

Mr Wong added that more owners of ageing residential projects may have been encouraged by 2016 sales to initiate en bloc sale processes this year, to monetise their assets.

Asked later by Member of Parliament Lim Wee Kiak if the current en bloc “fever” was sustainable, he responded: “Firstly, the bids which developers put up for en bloc sales need not necessarily translate into higher sale prices down the road.

“Because what developers are able to sell for their units eventually depends on demand and supply of the property market at that point in time, and bear in mind developers are also subject to ABSD (Additional Buyer’s Stamp Duty).

“They have to build and sell their units within five years of award of the site and that will put some pressure on them to sell at a reasonable price,” said Mr Wong.

As for whether the Government would need to up land sales to meet the developers’ demand, he said: “The en bloc sale sites sold since 2016 will be redeveloped, and made available for sale in the next one to two years.”

“The supply of these new units from en bloc sales, as well as other factors like population and income growth, and property market conditions, will be taken into consideration in deciding the quantum of land to be put out for Government Land Sales (GLS).

“Eventually, all en bloc units will be redeveloped and put back into the market … and that will increase supply in the market and put some moderating pressure on prices, down the road.”

Mr Wong noted the GLS programme is updated on a half-yearly basis and that details for the first half of 2018 will be announced by the end of this year.

“The Government will continue to monitor the overall trends and developments closely, and take appropriate actions to maintain a stable and sustainable property market,” he said.