New private home sales muted in August as Ghost Month, weak sentiment keep buyers away

Sep 15, 2023

DEVELOPERS sold just 394 new private residential units in August, 72.1 per cent lower than July’s sales figures, and also 10 per cent lower year on year.

Including executive condominiums (ECs), developers sold 649 units in August compared with the 1,471 units sold the month before, according to data released by the Urban Redevelopment Authority (URA) on Sep 15.

August is typically a slow month for property sales, with traditional superstitions around making home purchases during the lunar seventh month keeping buyers at bay, analysts noted.

Developers, too, tend to steer clear of launching new projects during the month. Some 590 units were launched in August, 72 per cent lower than in the month before, but more than the 134 units launched in the year-ago period.

Apart from the Ghost Month factor slowing sales, homebuyers have become increasingly reticent, said Leonard Tay, head of research at Knight Frank Singapore.

“Growing concerns weighing on the minds of homebuyers also include the current pricing against the increased costs of borrowing, economic uncertainty, and more public housing options in the form of BTO (Build-To-Order) launches in good locations.”

According to caveats lodged, developers sold the bulk of their new units during the first half of the month at 283 units, before the start of the Hungry Ghost month on Aug 16. The balance was sold in the remaining weeks of August.

There were no sales for residential properties priced at S$10 million or more in August. There were similarly no sales over S$10 million in July, whereas in June, there were two transactions at Les Maisons Nassim for S$32.7 million and S$30.8 million.

Lee Sze Teck, senior director for data and analytics at Huttons Asia, said some buyers may have adjusted their budgets with the much higher Additional Buyer’s Stamp Duty rates now applying to investment properties and to foreign buyers.

In total, foreigners’ purchases fell to 12 units in August compared with 19 units in July, according to URA’s Realis data. Half of the purchases were in the prime Core Central Region (CCR), with the other half in the Rest of Central Region (RCR) city fringe locations and suburban Outside Central Region (OCR).

Overall new home sales for the month were driven by the only EC launch in 2023. Called Altura, the project in Bukit Batok West Avenue 8 sold 62.5 per cent, or 225 units out of 360 units.

ERA key executive officer Eugene Lim pointed out that developers have collectively launched eight private new sale projects and one EC project between July and August 2023, totalling more than 3,000 units. He expects 13 more projects could be launched by the end of 2023.

August private home sales dipped with the dearth of major launches. Developers’ sales during the month came mainly from four projects – Orchard Sophia, The Arden, The LakeGarden Residences and TMW Maxwell.

Altura “was well received as there has not been an EC project launch in Bukit Batok for over 20 years, and ECs remain popular for their affordability and investment value”, added Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

Close to half of August’s sales were transacted in the OCR at 48.7 per cent, or 192 units. This was followed by the RCR at 26.9 per cent (106 units) and the CCR at 24.4 per cent (96 units).

For the year to August, new home sales currently stand at 5,189 units, down 5.6 per cent from the total sold in the year-ago period, said Tricia Song, CBRE head of research, Singapore and South-east Asia.

New launches in the pipeline include the 700-plus unit Marina View Residences, suburban project Hillock Green, and J’Den, the redevelopment of JCube mall.

Song expects 6,500 to 7,000 new private homes to be sold in 2023, compared with the 7,099 units in 2022, a tally which was “already a 14-year low since 2008’s 4,264 units”.

CBRE believes home prices, which are up 3.1 per cent in the first half of 2023, have peaked and are likely to flatten out in the next few quarters. “Barring widespread retrenchments and a sustained recession, a significant price correction is not expected given low unsold inventory and generally healthy household balance sheets.”

Song’s forecast for 2023 is for 3 per cent growth in private home prices, slower than the 8.6 per cent in 2022, due mainly to a weaker economic outlook. Official government forecasts are for 0.5 per cent to 1.5 per cent growth in gross domestic product, versus the 3.6 per cent recorded for 2022.