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Sunday January 8, 2012

Housing market to face tough year ahead

THE upmarket segment of the housing market faces a tough 12 months as it battles a possible oversupply of new homes and the effects of the recent cooling measures.

Thousands of units already launched are still awaiting buyers while developers might be considering delaying further launches until things pick up.

The saving grace is that interest rates remain low, and many property firms are cashed up from the bumper market in recent years so they can ride out the slump.

Chesterton Suntec International research head Colin Tan told The Straits Times on Friday: ‘If a developer has not launched its project yet, it might be better not to launch because once you do you’re locked in.’

Property consultancy CBRE said there are at least 25 launch-ready projects in districts 9, 10 and 11 - prime areas for high-end homes in the market.

Launch-ready projects are those that have obtained all the pre-requisites and approvals for sale and awaiting green light from developers.

CBRE also found at least 30 already-launched projects in districts 9, 10 and 11 still having at least half of their units, or 2,846 homes, unsold as of the end of November.

But Alan Cheong, associate director of Savills research and consultancy, said the oversupply scenario is a “short-term concern” as developers can stagger their launch and completion timeline according to market conditions to offset risks of a glut.

“Developers have strong balance sheets after reaping super-normal profits over the past five years,” Cheong said.

International Property Advisor chief executive Ku Swee Yong expects high-end transaction volumes to fall by 50% this year but for prices to hold.

Other experts, however, have predicted price falls of up to 15%. - The Straits Times / Asia News Network

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