http://www.straitstimes.com/PrimeNew...ry_756433.html

Private home sales slide in December

Figure at 2-year low but 2011 sales still at record high of 18,920 units

Published on Jan 17, 2012

By Esther Teo, Property Reporter


PRIVATE home sales in Singapore sank to a two-year low last month, as tough cooling measures and the weak economic outlook took their toll.

Still, the sudden slump was not enough to prevent total sales for the year hitting a new record of nearly 19,000.

Developers sold only 670 homes last December, including executive condominiums (ECs), possibly setting the tone for a more sombre market this year.

The last time monthly sales fell below the 670-unit level was in December 2009, when only 481 units were sold.

Last month's figure was well down from the 1,855 units sold in November, although sales tend to fall in December due to the Christmas and school holidays.

Last year saw a record 18,920 units sold - eclipsing the all-time high of 17,344 units in 2010, according to data from the Urban Redevelopment Authority released yesterday.

Excluding ECs - an increasingly popular public-private housing hybrid - new private home sales totalled 16,027 units last year, narrowly missing 2010's record of 16,292 homes by 265 units.

Experts say the Dec 7 cooling measures, which include an additional buyer's stamp duty of 10 per cent on all foreign home purchases, led to a knee-jerk reaction in the market.

Home buyers are adopting a wait- and-see approach in assessing the market and are holding off on purchases in anticipation of possible price falls, they add.

ERA Realty key executive officer Eugene Lim said the drop in monthly new home sales in December was expected, as buyers needed time to assess the impact of the 'major policy change'.

Developers are likely to hold back on major new private launches for now, with only EC projects going ahead, he added.

For some projects launched earlier last year, buyers backed out of purchases and returned units to developers.

These include CapitaLand's 583-unit Bedok Residences, with 31 units returned; City Developments' 892-unit The Palette in Pasir Ris, with eight units returned; and the Sim Lian Group's 452-unit Parc Vera in Hougang, with six units returned.

The Straits Times understands that the UOL Group's 577-unit Archipelago in Bedok Reservoir Road, launched early last month, had 17 units returned.

Ms Chia Siew Chuin, director of research and advisory at Colliers International, said this could be in response to the new measures, as buyers chose to forfeit a quarter of their option fee in anticipation of a price decline in the future.

She said that while low interest rates would keep supporting home buying this year, the slowing economy would likely hit job prospects and salary growth. This would dampen buyers' confidence.

'Additionally, the imposition of the additional buyer's stamp duty will shave off some level of buying demand, particularly from foreigners,' Ms Chia said. 'All these could drag down demand further, as prospective purchasers continue to adopt a cautious stance and hold out for possible price declines. Take-up for new homes could potentially drop to between 9,000 and 11,000 units (this year).'

Jones Lang LaSalle's (JLL) head of research Chua Yang Liang expects demand to continue to moderate, with estimated sales of 7,500 to 10,000 homes this year at the current pace of demand.

Prices are also expected to take a beating, with experts generally predicting corrections of between 5 and 15 per cent.

Mr Li Hiaw Ho, executive director of CBRE Research, said prices of prime homes could fall by 10 to 15 per cent, while mass-market homes could slide by 5 to 10 per cent.

'However, landed home prices will likely moderate by less than 5 per cent, since foreigners are generally not allowed to buy, and supply is limited,' he added.

JLL's Dr Chua thinks prices could fall by up to 8 per cent this year.

Experts also highlighted the popularity of ECs last year, as first-time home buyers and HDB upgraders snapped up 2,893 such units - 15 per cent of the private market. ECs were reintroduced to the market in 2010, after a five-year hiatus.

However, SLP International research head Nicholas Mak said that while EC demand is expected to remain strong for the first half, it might soften if mass-market home prices fall, and the price gap between that and resale HDB flats narrows.

Last month's take-up was again largely in the mass-market segment, with 79 per cent of sales in suburban areas. Only 108 homes were sold on the city fringe, while 35 units in the city centre found buyers.

Top-selling projects last month include Archipelago, with 103 units going at a median price of $1,118 per sq ft (psf), and The Nautical in Sembawang Road, with 84 units at a median price of $882 psf.

[email protected]