Fundamentals of Recent Spate of En Bloc Property Sales

Mr Speaker, a total of around 2,700 existing private residential units has been sold en bloc this year to date, and that is up from 600 units in 2016. The recent increase in en bloc sales could be attributed to two factors.

First, more developers are keen to replenish their land banks. There has been a healthy increase in the sales of new units in the first three quarters of the year which, in turn, means that the unsold supply in the pipeline has come down. To illustrate, there are about 17,200 units as at the third quarter of 2017, and that is down from about 40,000 units in 2012. So, because the numbers of unsold units have come down, developers are keen to replenish their land banks, and that has contributed in part to more en bloc sales.

The second factor is that successful en bloc sales in 2016 may have encouraged more owners of ageing residential projects to initiate the en bloc sale process this year, so as to monetise their assets.

The en bloc sale sites sold since 2016 will be redeveloped and made available for sale in the next one to two years. The supply of these new units from en bloc sales, as well as other factors, such as population and income growth, and property market conditions, will be taken into consideration in deciding the quantum of land to be put out for Government Land Sales (GLS).

The GLS programme is updated on a half-yearly basis with sites on the Confirmed List, which means that the site will be released for sale within the next six months; as well as sites on the Reserve List which means that the sale of the site can be initiated by a developer, if they assess that there is demand. Details of the GLS programme for the first half of 2018 will be announced by the end of this year.

The Government will continue to monitor the overall trends and developments closely and take appropriate actions to maintain a stable and sustainable property market.

Mr Speaker, I would like to thank the Minister for the reply. I would like to ask the Minister for his assessment on whether the current en bloc fever is sustainable, would that lead up to another bubble that is forming in our property market, and will the Government be considering more measures coming in to cool this market if there is a need.

Mr Speaker, Sir, I understand the Member's concerns. That is something that, I believe, many people have also expressed similar feedback and concerns on. I would say, firstly, that the bids that the developers have put up for the en bloc sales, and you see the high bids that have been put up, need not necessarily translate into higher sales prices down the road. That is something that people are concerned about – that the developers bid high for land and, eventually, this would translate into higher prices. That need not happen because what the developers are able to sell for their units will eventually have to depend on the demand and supply conditions of the property market at that point in time. Bear in mind that developers are also subject to Additional Buyer’s Stamp Duty (ABSD), meaning to say that they have to build and sell their units within the five years of award of the site. That would put some pressure on them to sell at a reasonable price within the five-year timeframe, otherwise, they would be subject to ABSD.

Eventually, we have to let the developers price their housing projects on a business or commercial basis. That is how they have done it. But they understand that these are market conditions. There is an ABSD regime in place, and we will monitor carefully to see what happens in the market down the road.

The other point that I would like to add is that, as I had mentioned earlier, the en bloc sites that are taken off the market now will eventually be put back into the market in the next one to two years. That would add new supply into the market. So, while there is this bid for en bloc sales now and supply conditions may be tight, eventually, all of the en bloc units will be redeveloped and put back into the market in the next one to two years, and that will increase supply in the market. That will also put some moderating pressure on prices down the road.

Having said all that, like I have mentioned earlier, the Government continues to monitor the overall property market trends very closely. I would like to reiterate what I said just now, that we would take appropriate actions to maintain a stable and sustainable market.