Spike in en-bloc sales may not lead to property bubble: Lawrence Wong _Today 06.11.2017

SINGAPORE – A total of about 2,700 existing private residential units have been sold en-bloc so far this year, compared with 600 units for the whole of last year, said Minister for National Development Lawrence Wong in Parliament on Monday (Nov 6).

The spike could be due to how more developers are keen on replenishing their land banks given the fewer number of unsold units in the market, said Mr Wong who was responding to a parliamentary question tabled by Member of Parliament Lim Wee Kiak (Sembawang GRC).

Noting the “healthy increase” in the sales of new units in the first three quarters of the year, Mr Wong said the unsold supply has dropped from about 40,000 units in 2012 to some 17,200 units as of the third quarter this year.

The successful en-bloc sales last year could have also contributed to the increase this year, encouraging more owners of ageing residential projects to initiate the en-bloc sale processes to montise their assets, added Mr Wong.

On whether the current en-bloc fever is sustainable and whether it could lead to another property bubble, Mr Wong said he understands these concerns but pointed out that the collective sales may not necessarily lead to higher sale prices in the market.  

“That’s something people are concerned about – that developers bid high for land, eventually this will translate into higher prices… that need not happen because what the developers are able to sell for their units will eventually depend on demand and supply of the property market at that point in time,” he said.

The developers are also required to meet stipulated conditions or face additional buyers’ stamp duty (ABSD), such as the need to build and sell their units within five years of being awarded the site. “That will put some pressure on them to sell at reasonable price, within a five-year time frame,” he said.

He added: “There is an ABSD regime in place and we will monitor carefully to see what happens in the market down the road.” En-bloc sites that are taken off the market will eventually be put back into the supply in the next one to two years, thus moderating the prices, he noted.  

“Having said all that, the government continues to monitor closely the overall property market trends very closely… We would take appropriate actions to maintain a stable and sustainable market,” he reiterated.

During the boom period of collective sales between 2005 and 2007, a total of 12,710 units were sold over the three years with a total value of S$22.3 billion, according to data from Cushman and Wakefield Singapore. From 2012 to last year, only 1,402 en-bloc units were sold, with a total value of almost S$3.5 billion — with zero transactions in 2014.