SINGAPORE (Nov 8): Lawrence Wong, Minister of National Development said on Monday that a surge in en bloc sales and higher prices achieved from land sales does not necessarily lead to higher selling home prices.

Instead, this will depend on the supply and demand factors when the projects hit the market.

Wong also says that an additional Buyer Stamp Duty (ABSD) will be payable if developers do not manage to sell their project within five years.

Meanwhile, there will also be qualifying certificate (QC) extension charges payable for sites won by foreign developers, which also includes listed companies.

During the Parliament Sitting, Wong was asked if the government will be looking to calibrate supply in the government land sales (GLS) in Dec 2017.

To which he replied the actual quantum will take into consideration the new number of units that will be returned to the market in 2018/2019 from the en-bloc sites.

In a Tuesday flash note, DBS analyst Rachel Tan says, “We believe that developers, who in recent times paid high land prices via GLS and en-bloc sales, will of course look to sell at a higher price to make a profit.”

However, Tan says that this does not mean that sell-through rates for these projects will be high, a data point which the research house will monitor when these sites hit the market in 1Q18.

Over the past few years, developers have kept the total sales quantum steady at $1-1.2 million by reducing sizes and Tan believes that this will likely to continue.

Hence, buyers will end up paying more per square foot.

In addition, Tan believes that the risk of write-off land prices in the event that pre-sales momentum is lacklustre is unlikely at this moment.

Developers instead are likely to re-look at selling price assumptions two to three years after the sales launch and closer to the ABSD deadline.

Moreover, the analyst believes that the government will not be tightening any measure at this juncture, especially when the current rise in transaction volumes is mainly led by Singaporean buyers (94% of transactions YTD) and for new homes in the Outside Central Region (OCR).

If the government does plan to tighten any measures, Tan believes that it would be indirect measures such as limit lending from financial institutions and raising land supply in the GLS.