http://www.businesstimes.com.sg/arch...sales-20130917

Published September 17, 2013

TDSR continues to bite in August developer sales

Property consultants believe sales will improve in Sept with new launches

By ong chor hao [email protected]


[SINGAPORE] New private home sales recovered last month from a drubbing the month before but remained subdued by the double whammy of the Total Debt Servicing Ratio (TDSR) framework and the Hungry Ghost month.

Data from the Urban Redevelopment Authority (URA) yesterday showed that 742 private homes transacted in August, excluding transactions for the hybrid executive condominiums (ECs).

This was 54 per cent higher than July's 482 units, but was just over half the 1,427 sales recorded in the corresponding month last year.

"While the market is generally slower during the Hungry Ghost month, the TDSR also kept it slow in August," said Ong Teck Hui, national director for research and consultancy at Jones Lang LaSalle, referring to the framework which mandates that property loans have to stay within 60 per cent of all monthly debt obligations to monthly gross income.

Developers launched 927 units for sale last month, an improvement over July's 557 homes.

A Religare Capital Markets report said this was the first time that sales have lagged launches for two straight months since January last year.

Market watchers said that, with the TDSR in place, sales are now taking longer to go through, because more detailed financial assessments are now required; buyers are also becoming more selective, with the purchasing power of some of them having been clipped.

Developers too may be continuing to play it safe, they reckoned.

Christine Li, head of research and consultancy at OrangeTee, said developers may have used the Hungry Ghost month to "re-adjust their strategies after the structural change in the housing market".

Mass-market residences continued to dominate activity in August, with Outside Central Region (OCR) homes making up 73 per cent of sales and 76 per cent of launches.

Units from the Rest of Central Region (RCR) made up 15 per cent of sales and 13 per cent of launches, while Core Central Region homes accounted for 12 per cent of sales and 10 per cent of launches.

Including ECs, 1,468 homes were moved in August, compared with 1,819 homes launched.

Demand for ECs remained sturdy, with 726 units sold last month, compared with July's 112 units.

Alice Tan, head of research at Knight Frank Singapore, said EC sales have been robust because their lower prices are within the reach of middle-income home buyers, even amid the TDSR rules.

Indeed, the two bestselling projects last month were ECs: Qingjian Realty's Ecopolitan moved 335 units at a median price of $795 per square foot (psf); City Developments' Lush Acres sold 311 units at a median price of $790 psf.

The private residence that sold the best last month was Wing Tai Holdings' The Tembusu, which moved 218 homes at a median price of $1,547 psf.

Property consultants believe sales will improve this month, with developers having launched the Glades and The Skywoods, and with Thomson Three to be launched soon.

They expect OCR homes, ECs and smaller units to do well, as they are more affordable. ECs are also expected to attract HDB upgraders who would have otherwise gone for homes by private developers because of a softening HDB resale market, said Ong Kah Seng, director of R'ST Research.

That said, Chia Siew Chuin, director of research and advisory at Colliers International, said home-buying demand is expected to be "shaven off" as the TDSR continues to work through the market.

Eugene Lim, key executive officer at ERA Realty, said that there is a pressure on developers to price their projects attractively, given the various property measures and a fresh supply coming to the market this year.

The spectre of the TDSR will "haunt the market" beyond August, said Desmond Sim, associate director at CBRE Research.

For the year, some analysts expect transaction volume to be significantly lower than the record of around 22,700 units last year; the range they cite is between 14,500 and 17,000 units.

The Ministry of National Development, in a written reply to a question filed by Nominated MP Tan Su Shan, yesterday called the status of the cooling measures "a dynamic situation", and said it would continue to monitor the housing market and review the cooling measures as economic conditions evolved.

Ms Tan had asked whether there was a risk of a policy overshoot that could lead to a protracted downturn affecting homeowners here.