Genuine home buyer demand sees increased activity for third straight month

Genuine home buyer demand and increased confidence saw private home sales in September defy economic gravity, with more than 1,000 unit sold for the third straight month

Data released by the Urban Redevelopment Authority of Singapore (URA) on Thursday, 15 October, showed that 1,329 new private homes excluding Executive Condominiums (ECs) were sold in September, up by 5.6% month-on-month (MOM) from the 1,258 units that were shifted in August 2020. On a year-on-year (YOY) basis, developers’ sales rose 4.6% from the 1,270 units (excl. ECs) transacted in September 2019.

This brings private home sales (excl. ECs) in the quarter of July to September 2020 to 3,670 units, more than doubling quarter-on-quarter (QOQ) on Q2 2020 ’s 1,713 units, and also an increase of 11.9% YOY on Q3 2019’s 3,281 units. This will also be the highest quarter of developer sales since Q2 2013’s 4,538 units.

This brings year-to-September to 7,532 units, up 0.8% compared to the 7,469 units sold in the first nine months last year.

In September, developers sold 56 ECs – which are a hybrid of public and private housing – 9.8% higher than the 51 ECs sold in August, and double the 28 ECs sold in September 2019. This brings total developer sales (including ECs) in September 2020 to 1,385 units, up 5.8% MOM and 6.7% YOY.

Commenting on the genuine home buyer demand which has increased activity for the third straight month, Ms Tricia Song, Head of Research for Singapore at Colliers International, said: “Residential developer sales continued to defy economic gravity in September, as pent-up demand fuelled the third straight month of sales over 1,000 units.”

She added: “This is also the strongest monthly sales since July 2018, which then saw bumper transactions before the cooling measures took effect on 6 July 2018. September’s record sales came mainly on the back of a successful new launch, Penrose. Penrose sold 389 units in September, dethroning The M at Middle Road which sold 380 units in February 2020, to become the best-selling new launch in 2020 to date.”

Top 10 Selling Projects in September 2020 (including EC) which spurred genuine home buyer demand

Source: Colliers International, URA
* CCR: Core Central Region; RCR: Rest of Central Region; OCR: Outside Central Region 

The best-selling private residential projects in September were:

• Penrose which moved 389 units at a median price of S$1,541 psf;
• Treasure at Tampines which sold 115 units at a median price of S$1,379 psf; and
• Jadescape which sold 62 units at a median price of S$1,774 psf.

3 New Launches in September 2020

Source: Colliers International, URA
* CCR: Core Central Region; RCR: Rest of Central Region; OCR: Outside Central Region 

There were three new project launches in September – Penrose, Verdale and Myra, all located in the city fringe and made up 32.3% of total sales in September (incl. ECs).

Of the new launches, Penrose sold 389 units or 69% of its total 566 units in its first month of launch. Factors for the stellar performance of Penrose would be its city fringe location, its walking distance to the MRT station, and the sweet spot price points of around S$1 million for two-bedroom units and S$1.5 million for three-bedroom units.

Verdale, a 99-year leasehold development of 258 units at de Souza Avenue, sold 44 units or 17% of total units at a median price of S$1,699 psf. This is a decent sell-through rate, given the competition in the vicinity such as Forett at Bukit Timah – which was the best seller in August – Daintree Residences and View at Kismis.

Myra, a freehold 85-unit development near Potong Pasir MRT station, sold 15 units at a median price of S$2,081 psf, a slight premium over nearby 99-year leasehold Woodleigh Residences, which has sold 55 units in September at a median price of S$1,926psf.

Analysing the September sales which is driven by genuine home buyer demand, Ms Song said: “The strong sales in the last four months since the exit of the Circuit Breaker pointed to genuine demand and confidence in the property market.”

“While this may seem at odds with the economic downturn and rising unemployment, the resilience of the underlying property market can be attributed to the fiscal stimulus including job support schemes, low-interest rate environment and the buoyant public housing market that enables upgraders to afford new private homes.

September’s sales continued August’s trend where buyers favoured attractively-priced city fringe projects.

In September, buffeted by the three new launches in the city fringe, the Rest of Central Region (RCR) made up the bulk of sales (excl. ECs) at 64.6%, compared to 49.5% in August 2020. Outside Central Region (OCR) or the proxy for the mass market segment makes up 29.0% of total sales, compared to 40.3% in August 2020.

We estimate 88% of the total developer sales in September 2020 were priced at the median price of S$1,000 – 2,000 psf, compared to 81% in August 2020.

Momentum in the high-end segment appeared to have slowed. In the luxury segment, The Avenir moved another 8 units at a median price of S$3,059 psf, a 5.7% cut from the median price of S$3,245 in January 2020. The priciest unit also came from The Avenir at S$7.63 million for a 2,411 sqft unit on the 22nd floor. The most expensive on a per square foot price came from one unit at Boulevard 88 at S$3,653.”

Commenting on the outlook of the future with genuine home buyer demand increasing, Colliers International said:

“On 28 September, URA announced a clamp down on the re-issuing of option-to-purchase (OTP) to the same buyers of the same unit, by developers.

We expect this to have a slight cooling effect on the developer sales going forward, as it should instil greater financial prudence in making property purchase decisions and prevent some marginal buyers from committing prematurely. This effect is not yet evident in September sales; based on the run rate of some 152 new private homes sold in the first four days of October as well as on caveats downloaded on 14 October, sales are still quite strong. These suggest that there is genuine demand from buyers.

Upcoming major projects in the pipeline include:

• 640-unit Clavon at Clementi Avenue 1;
• 396-unit The Landmark; and
• 319-unit Hyll on Holland.

We now expect 2020 developer sales to fall about 10% to 8,900 units from the 9,912 units in 2019. Flash estimates from URA on 1 October showed that private residential property prices grew at an increasing rate, by 0.8% QOQ in Q3 2020, after rising 0.3% in Q2.

With the resilience of the sales and price index up 0.1% year to date at this point, we now expect prices could be flat in 2020.”