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Published July 19, 2011
Ghosts may not vanish after seventh-month blip
Developers brace for usual slowdown, but property market problems run deeper than that
By KALPANA RASHIWALA
(SINGAPORE) The Hungry Ghosts may provide their usual scare, but the real menace for developers lurks deeper. They could be sailing into a perfect storm.
Even before this month kicks off on July 31, several other factors are already weighing down private home buying sentiment. 'The Ghosts' Month will provide developers with a good excuse if sales slow down even further in the next few weeks,' said one developer.
Colliers International's analysis shows that since 2007, developers' private home sales have dipped anywhere from about 19 per cent to 70 per cent month-on-month in the calendar months during which the Hungry Ghosts Month falls. The property consultancy used the monthly sales data that developers have been submitting to Urban Redevelopment Authority since June 2007, excluding executive condos (ECs).
Official stats released by URA on Friday showed that developers' sales slipped 25 per cent month-on- month in June, following May's 12.7 per cent month-on-month drop.
Market watchers say that while traditional Chinese may avoid buying homes during the Ghosts' Month, the younger generation are less likely to observe the taboo. When the property market is hot, the dip in sales during Ghosts' Month tends to be less marked; however, when sentiment is weak, the drop in sales tends to be more pronounced, say property agents.
As DTZ's SE Asia research head Chua Chor Hoon puts it: 'It's an additional factor that will affect sentiment in a weak market.'
She points to a whole host of factors which are already weighing down sentiments - including resistance to high prices, economic uncertainty in the US and Europe, cautionary market pronouncements by the National Development Minister and uncertainty about the impact of the increase in the supply of new HDB flats on the private housing market. Analysts also say the sharp slowdown in Singapore's economic growth in Q2 will affect sentiment among home buyers.
Said one developer: 'Hopefully we're not sailing into a perfect storm. Things have been quiet in the past few weeks. The market has come off a bit... In the past, when there were property cooling measures by the government, there was a knee-jerk reaction and after that, buying recovered. This was the case even with the last round of measures in January.
'But this time, the slowdown may be for real. Even sales of some of the shoebox projects have been affected,' he added pointing to The Interweave at Kim Keat Road in the Balestier area. The freehold development has 169 units, including about 110 one-bedders (from 344 sq ft to 441 sq ft). According to URA's data, 59 units were sold in May, when the project was first released, followed by 19 units in June. BT understands that so far this month, about half a dozen units have been sold. The project is priced at an average of $1,390 psf.
This year the Ghosts' Month, or the seventh month of the Chinese lunar calendar, stretches from July 31 to Aug 28, just before the one-week September school holidays begin on Sept 3.
Some developers like Hoi Hup usually do not release new projects during Hungry Ghosts' Month. However, Colliers' research and advisory director Chia Siew Chuin observed: 'In recent years, it is becoming apparent that projects with strong attributes and those which are attractively priced can perform well even if launched during the Ghosts' Month.
'For example, Trevista at Lorong 3 Toa Payoh and The Trizon (in the Mount Sinai area) were launched during the Ghosts' Month in 2009 and had encouraging take-up rates - of 90 per cent of 460 units released for Trevista and 100 per cent of 99 units released for Trizon - during the month of launch.' Trevista is a 590-unit development while Trizon comprises 289 units.
Talk in the market is that Far East Organization may release its euHabitat condo at Jalan Eunos very soon. The low-rise 99-year leasehold project will comprise 748 units including one to four-bedroom apartments, SoHo-style units and four-bedroom townhouses. BT understands that agents have started gathering interest and collecting cheques at an indicative average pricing of slightly above $1,000 psf, ahead of an imminent preview.
Far East, Frasers Centrepoint and Sekisui House are also expected to preview in August, during the Chinese seventh month, their Boathouse Residences at Upper Serangoon View, a 99-year condo comprising 493 apartments and a shop unit. The average price is expected to be $900-plus psf.
However, Hoi Hup told BT that it plans to wait till the eighth month begins before releasing its Arc at Tampines, a 574-unit executive condo project at Tampines Avenue 1/8.
Knight Frank executive director (residential) Wendy Tang said: 'Developers may just take a break given the current cautious sentiment and not push out projects until the eighth month. We're likely to see less buying activity in the seventh month. Some people may also take a holiday during the National Day period.'
'There's still movement in the market but showflats are generally quieter. Those who visit showflats know exactly what they want,' she added.
Meanwhile developers continue to sell units in existing projects. Last week, Kheng Leong is understood to have sold 19 units at The Minton, a 99-year leasehold condo in the Hougang area with an average price of just below $900 psf. CapitaLand is said to have found buyers for seven units at d'Leedon, a 99-year project at Farrer Road priced at $1,680 psf on average, last week.
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