IN a move seen as boosting the transparency of the property market, the Urban Redevelopment Authority (URA) will from this month require developers of delicensed projects to submit the net prices of units sold.
The URA will use this data to compute its widely-watched private home price index from this quarter.
This will align the price information for developers' sales in delicensed projects with the net sale prices that developers of licensed projects have been required to submit weekly to the URA since May 2015.
Net prices are the prices after deduction of any discount, rebate, reimbursement, allowance, payment, voucher or other benefit, whether in cash or kind.
A housing project may be delicensed if it has received Certificate of Statutory Completion, and if individual strata titles have been issued to the buyers.
A spokesman for the URA said the move is aimed at ensuring that the private home price index "remains robust in reflecting property price movements".
The spokesman was elaborating on the change in policy after Real Estate Developers' Association of Singapore (Redas) president Augustine Tan referred to it in his speech at Redas' mid-autumn festival celebration; Mr Tan had lauded the move as one that will improve the transparency of the property market.
Like most market watchers, Edmund Tie & Company CEO Ong Choon Fah said she does not expect the move to create a big dent in the URA private home price index, though there will be some impact.
"Collating detailed sales-price data in delicensed projects will provide a more holistic picture; there's going to be more of these projects.
"However, if we look at the universe of private-housing transaction volumes, developers' sales in delicensed projects form only a small proportion."
Unlike developers of licensed projects, who are required by law to submit weekly sales data to the URA, listing the discounts and other incentives to reflect the net sale price, developers of delicensed projects are no longer regulated by the Housing Developers (Control and Licensing) Act and its rules, which opens the way for them to launch novel marketing schemes for these projects.
The URA now captures data for developer sales in delicensed projects, as well as other secondary-market sales of private homes by individuals, from records submitted to the taxman for stamp-duty payment.
While upfront price discounts given by a developer in a delicensed project would still be captured in these records, some of the indirect incentives to woo home buyers - for example, through the deferred payment scheme, rental guarantees and absorption of additional buyer's stamp duty if it is granted after the sale-and-purchase agreement is signed - are not.
Commenting on the change announced on Wednesday, a seasoned property consultant who requested anonymity said: "In terms of index methodology, this is the right thing to do.
"You cannot be using net prices (after deducting all benefits granted to the buyer) for developers' sales prices in licensed projects, but gross pricing when developers sell units in delicensed projects."
In recent months, some market watchers have suggested that the URA's price index - particularly that for the Core Central Region, where a flurry of developers' sales in delicensed projects have been packaged with attractive incentives - may be slightly inflated as some incentives may not be captured in the sales data the URA uses to compute its price indices.
Redas's Mr Tan told The Business Times that, with the change, "the index will be more reflective of the market, and the implication is whether or not the authorities think prices have dropped to a level that they are comfortable with".
The unnamed seasoned property consultant explained: "Redas' thinking is that if net pricing is used for developers' sales in delicensed projects, the URA private home price index will reflect a sharper drop than the 9.4 per cent decrease (from the recent peak in Q3 2013 to Q2 2016) - and use this to lobby the authorities to remove or tweak the property cooling measures."
The URA spokesman noted that a small percentage of total private home transactions come from developers' sales in delicensed projects.
Although URA will be collating net sale price information from developers for delicensed projects, this information may be released only in an aggregated form, for example, for computing a price index. URA is obtaining the data through legal provisions in the URA Act.
The spokesman said: "Unless written consent has been given by the developers to URA to release the data, the Act disallows URA from disclosing the net prices of individual units sold in delicensed projects."
This is unlike the case for developers' sales in licensed projects, for which the net price of each unit sold in the preceding week is now listed on the URA website every Friday afternoon.
Tan Tiong Cheng, executive chairman of Knight Frank Singapore, said: "Ideally, net prices of individual units sold in delicensed projects should also be made public, so that the consumer will know what is the effective price being paid for each unit - net of all perks given by the developer."
A property industry player told BT that, in order to clear remaining units to meet sales deadlines under the Qualifying Certificate (QC) rules, developers (especially those for delicensed projects) would offer agents very high commissions of 2-5 per cent to help them to find buyers quickly. (The typical commission rate is 1-1.5 per cent.)
However, such agents may give up a big portion of their commission to the buyer to close a sale. "So the net price to the buyer is lower than the net price recorded by the developer," said the industry player.
In the end, the developer meets his goal of selling units in the project - and also avoids having to pay a penalty to the state (in the form of extension charges) while maintaining a certain headline price.
"From the perspective of a potential buyer in the market, however, the price he sees in the caveat is not the effective net price."
The Council for Estate Agencies frowns on this practice by agents; its professional service manual states that "property agents should not offer any benefit, in cash or in kind, to any party in a transaction, so as to induce them to engage the services of the agent".
In addition, agents should not agree when any person asks for such benefits.