Singapore new private home sales decline at slower pace than launches in December

17 Jan 2022
Property News

Developers last month launched 383 private residential units, about 71.6 per cent fewer than the 1,349 launched in December 2020. 

ALTHOUGH developers released considerably fewer private residential units for sale in December 2021, all 3 market segments in Singapore recorded strong overall take-up rates of more than 100 per cent, said Edmund Tie head of research and consulting Lam Chern Woon.

He highlighted that the outside central region (OCR) posted 224 new sales last month even with no new units launched, while the take-up rate - measuring new sales against launches - reached 123 per cent in the core central region (CCR) and 107 per cent in the rest of central region (RCR).

“Units from previously launched projects continued to be soaked up by homebuyers, while developers are taking a cautious approach to launches in view of the newly introduced cooling measures,” Lam added.

Nicholas Mak, head of research and consultancy at ERA, noted that the smaller month-on-month drop in sales in December, as compared to the decrease in launches, suggests “there was underlying buying demand in the property market”.

He described the launch and sales activity in the first half of December as “reasonably active”, before it slowed down considerably in the wake of the fresh cooling measures.

That being said, OrangeTee & Tie senior vice-president of research and analytics Christine Sun flagged that last month’s sales may not reflect the full impact of the new cooling measures, as a number of deals were closed before the curbs were introduced on Dec 16. Based on URA Realis caveat data, about 60 per cent of the transactions of new homes, including executive condominiums (ECs), were concluded in the first half of the month, she added.

Moreover, the 137-unit Mori was launched before the cooling measures, which may have driven sales higher. “Therefore, January’s sales figure may provide a clearer picture of the full impact of the property curbs,” Sun said.

The analysts’ comments came as the Urban Redevelopment Authority’s (URA) figures on Monday (Jan 17) showed that real estate developers in Singapore sold 650 private homes last month, driven by transactions in the city fringe, and declining 58 per cent from November’s volume.

They also launched 383 private residential units islandwide, a 70.1 per cent plunge from the 1,283 units put on the market in the month prior.

These figures - which exclude EC units - were obtained through URA's survey of housing developers.

The overall volume is slightly higher than analysts' estimates that were released last week; they had pegged the month's new private home sales at around 643 units, based on caveats lodged. The seasonal year-end lull as well as the fresh round of cooling measures played a part in slowing sales, the analysts earlier said.

On a year-on-year basis, URA data on Monday showed that developers moved 46.6 per cent fewer homes last month, compared with 1,217 units previously. They also launched 71.6 per cent fewer units than the 1,349 in December 2020.

Lam noted that new private home sales amounted to 13,372 units for the whole of last year, marking the highest annual volume since 2013, when 14,948 units were transacted.

“While the latest cooling measures will dampen sales momentum, the overall market remains supported by a robust labour market, ongoing economic growth, and healthy demand-supply dynamics in the property market,” he added.

Mori, Perfect Ten and Zyanya were among the new projects launched last month. JLL wrote that Mori, on Guillemard Road, sold 71 out of 137 units at a median price of S$1,869 per square foot (psf); Perfect in Bukit Timah moved 11 out of 230 units at a median price of S$3,222 psf; and Zyanya on Lorong 25A Geylang sold 2 out of 34 units for about S$1,899 psf.

According to URA data, the RCR or city fringe continued to record the most new sales among the 3 market segments, with 292 units moved in December. The region also saw 274 units launched.

Knight Frank Singapore’s head of research, Leonard Tay, said the RCR was the star performer of 2021, eclipsing the other segments in terms of price growth and primary sale volume. “New sales in the RCR thrived as a succession of popular launches were well-received by buyers. In particular, integrated developments such as Canninghill Piers were coveted and commanded price premiums,” he added.

Meanwhile, the OCR or suburbs posted the month’s second-highest volume as developers moved 224 private homes, although there were no new launches.

PropNex Realty noted that in the OCR, the number of units sold was roughly half that of the 459 in November, and marked the lowest monthly OCR volume since April 2020 - during the “circuit breaker” - when 98 units were sold. The firm attributed the slowing sales in the OCR to the fast depleting stock of unsold homes and the lack of new launches.

And in the CCR, new sales totalled 134 units and launches amounted to 109 units in December.

Tay said that although some foreigners could now be deterred by the increase in additional buyer’s stamp duty (ABSD), others might still be interested in purchasing luxury homes in the CCR, as prices there did not increase as much as the other regions. For non-landed properties, CCR prices grew about 3.7 per cent in 2021, milder than the 16.9 per cent jump in the RCR and the 8.4 per cent rise in the OCR, based on flash estimates released on Jan 3.

“Given the amount of anecdotal interest from potential foreign homebuyers, the globally mobile wealthy may still be prepared to pay the 30 per cent ABSD as a premium for entry into the Singapore prime residential market,” Tay said.

Edmund Tie noted that median psf prices of new private homes in the CCR rose 1.9 per cent month on month to S$3,033 in December, from S$2,976. In the OCR, median psf prices inched up by a modest 0.3 per cent to S$1,679, from S$1,674 in November. The RCR posted a decline of 1.8 per cent to S$2,182, from S$2,221 in the previous month. Lam expects prices to stabilise and grow at a slower pace this year, in view of the new property curbs.

URA’s figures also showed that 69 new EC units were sold last month. New home sales, including ECs, thus totalled 719 units, which was down 55.4 per cent from November and 43.2 per cent fewer from the year-ago period. No new EC units were launched in December 2021.

Tay said that following the latest cooling measures, sales volumes and prices of private homes are likely to “show tentativeness in Q1 and perhaps Q2 2022 before underlying fundamentals kick in to re-establish homebuying demand”.

He projects overall private residential prices to increase about 1 to 3 per cent this year, considering the new measures and probable interest rate hikes. In his view, new sales of private homes could reach 8,000 to 9,000 units in 2022, amid fewer launches in the pipeline.

ERA Realty’s key executive officer Eugene Lim expects the primary market to regain momentum after the Chinese New Year period. “From what we know, developers are currently keeping to their launch plans and schedules,” he added.

In 2022, there will be 2 EC launches and “a good mix” of new private residential projects targeting various market segments, Lim said. Developers are also likely to focus on clearing their existing stock from projects that are already on the market, he noted.

Mak from ERA foresees developers selling about 9,000 to 10,000 private housing units this year, if the market recovers in the second half of 2022.

Source: The Business Times
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