Prices for new residential properties likely to remain unaffected

    • Property analysts predict the prices for the Housing Development Board (HDB) flats and private residential properties to remain unchanged despite a considerable increase in the construction costs.
    • Developers are expected to bear the additional constructional cost or negotiate with the contractors to work on a lower cost instead of increasing property prices as buyers’ supremacy in a weak economy.
    • The measures to keep the Covid-19 outspread low in the construction sector will surely increase the construction costs for contractors and the contractors will have to bear these additional costs said, National Development Minister, Lawrence Wong.
    • The construction sector has been allowed to resume operations starting from June 2 under strict safe-distancing measures.
    • However, developers need to show that they have proper safety measures in place in order to get permission to resume the projects.
    • The COVID-19 test will be conducted for laborers and other construction workers every 2 weeks.
    • Although the developers have been burdened to bear additional costs in principle, the authorities have told that they are looking out for a solution to divide the additional cost among the various parties involved but haven’t really specified the parties.
    • Analysts predict the construction costs to go up because of these measures but it is too soon to predict the full impact on the construction costs.
    • The construction costs for private condominiums are expected to increase by 7% to 10% which will lead to a 2% to 3% increase in the selling price of the properties.
    • The buyers have become very price-sensitive since the outbreak started earlier this year and they not buy properties if they notice an increase in the price as compared to the price before the outbreak, said property analyst, Ong Kah Seng.
    • The buyers have more bargaining power in a weaker economy hence the developers will not put the burden of higher costs on the buyers owing to higher competition and declined demand said Mr. Nicholas Mak, head of research and consultancy at ERA Realty.
    • There can be a slight increase in the selling prices of luxury condominiums as developers have a wider range of price to play with.
    • The rise in the construction costs will not affect the profit margin of developers rather the contractors will have to bear the additional construction costs as the developers pay a lump sum fee to the contractors before the start of the project.
  • The prices for upcoming Build-To-Order flats are unlikely to increase as HDB has a clear advantage of economies of scale. Even if the prices increase it will not be more due to political implications.

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