Property News & Market Trends

Can the Government's hike on Development Charge stem the rise of En Bloc sales?

Property stocks got hit by a 2% drop. I say you should buy them. Seriously, what the Government did by introducing a back to normal DC is basically a gear shift. It will not impact any big developers as they can easily pass the buck, about an increase of 2-3% of the cost to the end buyers. And why not? 2% of $2,000psf is just a miserable $40psf increase. That's just a slight pinch to irrational buyers and no effect on speculators at all. How can that stall the engine cruising at top speed?

Wrong mechanism. It'll dampened the smaller developers as they are caught off guard. As for the bigger players on prime property, it's not an issue at all. In fact, they now have a better bargaining chip to lower the asking prices of collective sales. But don't expect the developers to absorb the extra charges. Anyway, buyers will pay for it just the same.

It seems the Government is trying to figure out a way to suppress the over-heated market without causing an upset. What's causing the incredible bull run on prices? Speculators. From what we understand from agents & transactions, buyers who can afford to pay for high asking prices are not interested to live in, but to flip when possible.

It's not uncommon to see an option change hands 2-3 times before the exercised date. That said, no buyers are even thinking if they got the property at a good price-value ratio. As long as they can flip in 2 weeks, they are safe. Looking at how developers raise their prices in a weekend, who can lose money if they can grab the first bite?

Until and unless this option-sell-transfer is stopped, new projects' prices will continue to escalate, regardless of logic. An anti-speculation measure will put this "crazy price" market back to nromal, healthy growth. I expect it will come sooner than most would expect if figures for the 3rd quarter show no sign of these spikes slowing.

So, for speculators and flippers, do your thing when you can. And make it fast before the reality catches up. Your days may be numbered. Cheers! - Danny 'Bingo'

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