Quiet month for new private home sales

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Quiet month for new private home sales

Sep 16, 2015

Developers sold 495 units during Hungry Ghost month, no new projects launched

Rennie Whang


New private home sales stagnated again last month during the Hungry Ghost Festival with no new condo launches to tempt buyers.

Developers moved 495 private homes in August, 69.3 per cent below the 1,611 sold in July, according to Urban Redevelopment Authority data yesterday.

This was comparable to the 437 homes sold in August last year and similar to the 400-500 monthly sales level seen in months when no new projects were launched.

July's sales spiked, thanks to strong interest at the attractively priced High Park Residences in Sengkang. It was also the best selling project in August, moving 76 units at a median price of $933 per sq ft (psf).

Overall primary sales numbers for this year could just match last year's total of 7,400 units, said Mr Alan Cheong, Savills' senior director of research and consultancy.

"These numbers do not a healthy industry make... As secondary sales take their cue from primary sales, primary sales should preferably be in the 10,000 to 12,000 units per year range for the real estate service industry to function normally," he said.

Low transaction volumes especially hit the smaller agencies, which are wholly dependent on residential sales and may not have large valuation departments or investment sales teams, he noted.

While last month's weak sales were within expectations as developers had held back launches, transactions this month are expected to be stronger with the launch of the 663-unit Principal Garden in Prince Charles Crescent, said PropNex Realty chief executive Mohd Ismail.

The higher income eligibility ceiling for executive condominium (EC) buyers introduced last month did not appear to lift sales significantly. Developers sold 466 EC units in August compared with 495 units in July and 110 units in June.

Sol Acres EC was launched last month and sold 259 units at a median price of $787 psf - a favourable outcome given the Hungry Ghost Festival and possibly due to the relatively low prices, said ERA Realty key executive officer Eugene Lim.

Sol Acres EC managed to maintain sales momentum after the launches of The Brownstone EC and The Vales EC in July, which together have 1,155 units, noted Mr Ong Teck Hui, JLL national director of research and consultancy. No new ECs were launched in June.

Yet unsold EC inventory has been building up. The take-up rate was 42.9 per cent in July and 65.9 per cent last month, said Mr Nicholas Mak, SLP International executive director. "In August, the number of launched and unsold EC units rose to 3,160 units. This is the first time since mid-2007 when such statistics were made available, that (it) exceeded the 3,000-unit level," he said.

The market's muted response to the higher income ceiling could be due to a number of factors, including a developer's track record, finishings, location, tougher lending rules and the many unsold EC units, said Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.

But there should be a five to 10 per cent increase in EC sales volume this year over 2014 due to the higher number of launches and the larger pool of qualifying buyers resulting from the higher income ceiling, he added.

Upcoming launches include Signature at Yishun this month; and Wandervale in Choa Chu Kang, The Criterion in Yishun and Parc Life in Sembawang later this year.

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Aug slump in new home sales unlikely to affect cooling measures: analysts

Units sold down 69% from July high; consultants say buying inertia may set in

By Lynette Khoo

[email protected] @LynetteKhooBT

Sep 16, 2015


THE slump in developers' private homes sales last month came in largely expected, after July's sales were skewed by the launch of a massive project.

However, the slump is hardly an impetus for the government to tweak the property cooling measures now. And with such status quo expected to last at least until the end of the year, a buying inertia may ensue, consultants say.

Excluding executive condominiums, some 495 private residential units were sold by developers in August, the latest data from the Urban Redevelopment Authority revealed.

This marked a 69 per cent plunge from the 1,611 units sold in July, but then the number of units launched was 59 per cent lower than in the previous month.

The month-on-month dive was the result of a spike in July, during which 73 per cent of the volume came from the launch of private condominium project High Park Residences, where the majority of units were priced at less than S$1 million.

Desmond Sim, head of research at CBRE for Singapore and South-east Asia said: "Sales numbers for August point to stable underlying demand for projects, reverting to the 400 to 500 level following the spike in the previous month. It will be some time before any decision is made on the lifting of cooling measures."

Knight Frank head of research and consultancy Alice Tan pointed out that the initial hype for new launches in the preceding months fizzled out in August and there was a lack of new launches.

"The Hungry Ghost Festive is less of a factor in this day and age, especially for younger buyers," she said. "It is still about pricing and the anticipation of further price adjustments down the road."

Of the 495 new private residential units sold in August, 72 per cent were in the suburban areas, where 82 per cent of new units launched were located. Consequently, the top 12 selling projects in August were all in the Outside Central Region (OCR).

Including the public-private hybrid ECs, developers sold 961 residential units, compared to 2,106 units in July.

Bucking the sales momentum in the EC market was MCL's Sol Acres in Choa Chu Kang Grove; the absolute number of units sold in this development during its launch weekend made it the best-selling EC project so far this year. Some 259 out of its 1,327 units were sold in August, with a median price of S$787 per square foot (psf).

Private condo project High Park Residences in Fernvale continued to sell 76 units in August at a median price of S$933 psf, after moving 1,139 units in July alone, based on the latest monthly data compiled by URA.

"This shows that a project with more affordable pricing will find buyers more easily in the current market," said JLL national research director Ong Teck Hui.

As for the EC market, sales pick-up in recent launches has been "gradual rather than robust". Buyers remain price-sensitive, so it remains to be seen whether more of them will come forward with the raising of the income ceiling, he said.

City Developments' The Brownstone in Canberra Drive, a 638-unit EC project launched in July with 182 units sold in that month, moved another 36 units in August at a median price of S$817 psf.

The income ceiling for households buying new ECs was raised from S$12,000 to S$14,000 from Aug 24.

CBRE's Mr Sim said that, with more EC launches this year and the larger pool of qualifying buyers arising from the income ceiling hike, there should be a 5 to 10 per cent increase in EC sales volume for the whole year.

But prospective EC buyers will still need to consider larger factors like developers' track record, finishings, location, the mortgage servicing ratio, as well as the nearly 5,000 unsold EC units that have already been launched, he added.

Also in the pipeline are a few EC projects slated to be launched over the next few months. These include Sim Lian Land's Wandervale in Choa Chu Kang, CDL and TID Residential's The Criterion in Yishun and Frasers Centrepoint and KH Capital's joint project Parc Life in Sembawang; units at JBE Holdings' Signature at Yishun are expected to sell at an average S$750 psf or less when booking begins on Sept 26.

Upcoming private condo launches include Nanshan Group's maiden project in Singapore called Thomson Impressions in Lorong Puntong. The Andrew Residences by MCC Land is targeted to launch in October or November. UOL and Kheng Leong are expected to release their 663-unit Principal Garden condo in Prince Charles Crescent next month.

PropNex CEO Mohammed Ismail noted that prices for upcoming projects will remain competitive as the potential pool of buyers shrinks and developers face steeper competition.

"With no changes to the government curbs on the horizon in 2015, the private residential market is expected to remain soft," he said. "We expect new private home sales volume to be about 8,000 to 9,000 units. Transaction volume will continue to be launch-driven, largely dependent on the price and location of the project."

Notably, the strong mandate that the Singapore electorate has just given the ruling party to continue governing the country for another term is now seen providing an impetus for policies enhancing housing affordability to continue.

Any adjustment to property cooling measures that runs counter to that principle will affect the government's credibility, consultants said.

With the topic of foreigners still a touchy one, it is unlikely that the government will reduce the additional buyers' stamp duty (ABSD) for foreigners' property purchase, Ms Tan said.

Consultants foresee that the government will go only as far as to lift the ABSD for Singaporeans' second or third home purchase.

Citing rising interest rates, currently low speculative activities in property, tight financing rules and looming housing supply, ERA Realty key executive officer Eugene Lim said that lifting the ABSD for Singaporeans will not affect the stability of residential property prices.

The timing of the Federal Reserve's interest rate hike, which will raise the cost of borrowing here, is critical to any policy adjustment. "If they delay the hike in interest rates, it will prolong the impasse," JLL's Mr Ong said.