Monday, Mar 2, 2015
THE STRAITS TIMES
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Home vacancy rates 'may reach new highs'
Redas chief warns of falling prices with new properties set to hit market
Published on Feb 28, 2015 1:11 AM
By Rennie Whang
RESIDENTIAL vacancy rates here could surge to record highs, given the number of new properties set to hit the market, a real estate industry leader has warned.
The prediction came yesterday from Mr Augustine Tan, president of the Real Estate Developers' Association of Singapore (Redas), in some of the strongest comments made by developers recently.
"This will cause a further slip in home rentals and a downward spiralling of property prices," he warned in a speech at the Redas Spring Festival Lunch, where Ms Grace Fu, Minister in the Prime Minister's Office, was the guest of honour.
The vacancy rate at the end of last year was nearly 8 per cent, or 24,000 vacant units - 54 per cent more than the vacant stock levels in 1998, when the vacancy rate last peaked.
"As we have seen in the past, we can go into an oversupply situation very quickly. As we move on, and we have a larger base of private properties... the boom and the bust, if anything, is going to be more damaging," Mr Tan said.
More than 75,000 new private residential homes are expected to be completed from now to 2019.
Mr Tan's comments came after National Development Minister Khaw Boon Wan said last week that the residential market had achieved "a better balance between sellers and buyers".
Mr Tan acknowledged that the Government's cooling measures had achieved their intended goal of stabilising property prices.
Prices have fallen 5 per cent from the last peak in 2013, according to the Urban Redevelopment Authority's Property Price Index, but actual prices in the luxury homes segment have dropped by at least 20 per cent, he added.
"The imposition of the additional buyer's stamp duty on this segment runs counter to the Government's efforts to encourage foreign investment flows into the country," Mr Tan said.
He called for a "public-private-sector collaborative effort in understanding" and managing the real estate market. "The Government, working on its own, may not be able to manage precisely the rate of decline in prices in order to arrive at a level that is deemed to be desirable for a stable property market," he said.
"They may have in mind a certain target but the measures, if not moderated, could lead to an unintended downward spiralling of prices by much more. It is not in our national interests to see this happen."
On whether prices will fall sharply, Knight Frank Group managing director Danny Yeo agreed that prices are expected to weaken. But "at which point will the scale tilt and prices fall much faster? Six months, nine months, or a year? That's a question everyone is concerned about".
Tuan Sing group chief financial officer Chong Chou Yuen noted as well that luxury home prices have fallen by more than 20 per cent in Sentosa, but some analysts have said the luxury property market, while weak, is not representative of the entire market.
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