Take a quick look at how the developer priced their other developments. Let’s take a look at the recent TOP project, Kingsford Waterbay.
Above information is extracted from Edgeprop. Kingsford Waterbay consist of 2 parcels from Government Land Sales (GLS). Sold in December 2013, the estimated breakeven price for both plots works out to be $937psf.
Let’s now take a look at how this new launch was priced from the beginning till the last unit sold.
Kingsford Waterbay was launched in early 2015, during the Chinese New Year period. From the chart above, we can see that developer launched at an average of $1100psf. Taking reference from the estimated break even psf of $937, developer factor in a 10-20% increase from the breakeven price. We can also notice the average pricing of the development increases over time since launch till the last unit sold.
The average pricing of $1100psf at the launch was an attractive pricing. Developer did not price 30 or 40% above the estimated breakeven price but a modest $1100psf. This could also due to the introduction of Total Debt Servicing Ratio in 2013, where we observed Singapore property market stabilizing.
Interesting, we see the average pricing of the development increased in 2016, even when the overall Singapore property price index stabilizing (Singapore property price index started increasing some time from 2017 onwards). Although price increased, sales continued and in 2018, all units were sold at an even higher average psf.
Base on Kingsford Waterbay example, buyers who bought during launch benefited the most. Although in 2013, with the introduction of Total Debt Servicing Ratio, many buyers were worried and concerned whether prices will dip. In my opinion, developers are also aware of the market conditions and they will want to price it realistically and clear off their inventory. When opportunity presents itself, developers will also increase their price to have a gain bigger profit.
What are the market sentiments in coming 2019? Will Normanton Park be a repeat of Kingsford Waterbay? Is it better to buy during launch, or wait till much later to buy? Drop me a note if you would like to discuss more.