New launches, affordability help property buck economic gloom

New launches, affordability help property buck economic gloom

Developers' July housing sales best showing in 12 months, but things may not be hunky-dory

Fri, Aug 16, 2019


PROPERTY seems to be bucking the general gloom that has beset most sectors of Singapore's economy.

Based on government data released on Wednesday, developers' overall housing sales volume for July 2019 was the highest in 12 months. The rosy picture came amid new launches last month, particularly of Piermont Grand and One Pearl Bank, which were well-received.

Piermont Grand is an executive condominium (EC) project in Punggol. ECs are a public-private hybrid housing form that has experienced a dearth of new launches in recent years.

One Pearl Bank is an iconic private condo project that will come up in the Chinatown area, next to the central business district.

The other top-selling projects in July included mega mass-market condo developments Treasure at Tampines and The Florence Residences in Hougang. Demand for these projects was driven largely by affordable pricing. "Their median prices at S$1,325 psf and S$1,449 psf, respectively, are within the reach of many entry-level private home buyers," said Tay Huey Ying, head of research and consultancy at JLL Singapore.

The total 1,556 residential units (including ECs) that developers moved in July was up 89.3 per cent from 822 units in June. The July sales number was just 12.4 per cent shy of the 1,776 units that developers moved in July 2018, a high base with sales for that month bolstered by homebuyers flocking to showflats on the night of July 5, 2018 to snap up properties before the latest property cooling measures took effect the following day.

Excluding ECs, developers sold 1,178 private homes in July 2019, up 43.5 per cent from the 821 units they moved in the previous month but down 31.7 per cent year on year from 1,724 units in July 2018.

Property consultants hailed last month's sales figures, coming on the back of negative news of Singapore's economic indicators amid rising global trade tensions, as testament to the resilience of residential property demand in Singapore. There has also been much noise of a revival in foreign buying, especially in the high-end segment - as property investors flock to Singapore, which is seen as a haven of stability amid the uncertainty elsewhere.

The overall low interest rate environment is also good for property buyers. However, beneath the exuberance generated in some circles following the Urban Redevelopment Authority's (URA) release of licensed housing developers' sales data for July, things are not all hunky-dory.

Take for instance, the 378 units that City Developments and TID sold last month for their newly-launched Piermont Grand condo. This is impressive, and a reflection of pent-up demand in the EC market; Piermont Grand is the first EC launch in over a year. That said, its sales figure is not as high as for the previous EC launch, Rivercove Residences in Sengkang, in April 2018; a total of 512 units were sold in the same month at a median price of S$970 per square foot (psf).

Piermont Grand's median price for sales done last month was higher, at S$1,107 psf - setting a record for a newly-launched EC project.

"The relatively slower sales at the project may signal price resistance setting in from buyers, " said Tricia Song, head of research at Colliers International Singapore.

URA's benchmark overall private home price index rose 1.5 per cent quarter on quarter in Q2 2019. Year on year, the index was up 1.2 per cent.

Developers who paid high prices during the land-buying binge from 2017 to first-half 2018 will no doubt try to continue upping prices for new launches. But they will have to factor whether the demand side can support their launch prices, said CIMB Private Banking economist Song Seng Wun.

When asked if the good residential property numbers may spur further cooling measures ahead, Mr Song said: "We are seeing headwinds in the economy currently and the labour market has softened. Going forward, we are going to have a lot of new-launch supply, which suggests that there will be downward pressure on prices.

"All these factors will shape property market conditions in the coming quarter. It is not necessary for the authorities to issue additional cooling measures at this juncture."

CBRE's head of research for South-east Asia, Desmond Sim, expects downward pressure to come only in the mid to longer term - when the impact of the weaker macroeconomic environment settles in, and when developers are compelled to reduce prices as the five-year sales deadlines for their projects (from the date of site purchase) approach.