by OrangeTee & Tie Pte Ltd.

Prices of mass market property launches could hit record high as developers face cost constraints

SRX Private Residential Data

Singapore, 01 Jun 2022

The average price of several suburban project launches has been seen creeping near to, or crossing, the S$2,000 per square foot (psf) barrier, indicating that rising expenses and limited availability may result in new benchmark pricing in the private residential market this year.

The cost of land, building, and materials has risen, while the number of unsold units has decreased, particularly in the Outside Central Region (OCR) or suburbs. Rising interest rates will increase the cost of funding for developers.

OrangeTee & Tie’s chief executive Steven Tan suggested that some buyers may turn to real estate assets as an inflation hedge, while others may want to lock in interest rates before they rise further.

Tan also noted that inventory in the OCR is very low, which means buyers who are keen on new launches have limited choice. “If affordability is a concern, they still have to go for OCR. Many people may not be eligible for executive condominiums.”

OrangeTee & Tie’s Tan also expects a chain effect, observing that the price gap between the 3 regions has been narrowing. An OrangeTee report noted that upcoming launches in the RCR could start from S$2,200 psf. The report highlighted that many new city fringe condos at Queenstown, Potong Pasir and Eunos were launched at an average price of around S$1,800 psf, prior to the pandemic.

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