Ravi Chandran
Two months after the property cooling measures, condo buyers seem to be streaming back to the market. Prominent real estate service company, Orange Tee & Tie, in making this observation noted that “private developers’ home sales rebounded strongly by 51.1 per cent month-on-month (m-o-m) to 932 units in September, rising above the 12-month (Sep 2017 to Aug 2018) average of 760 units.”
Orange Tee was referring to data released by the Urban Redevelopment Authority (URA) on Oct 15 which showed that condo buyers snapped up 932 new home sales last month, compared with 657 units in the same month last year. This data of new home sales is an increase of about 42 per cent from a year earlier, and a 51.1 per cent increase from the 617 units sold in August. Including executive condominiums (EC), new home sales rose 47.5 per cent to 944 units.
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In noting that projects in Rest of Central Region (RCR) continued to dominate the market as they accounted for 73.8 per cent of new sales in September this year, rising steadily from 40.8 per cent year-on-year (y-o-y), Orange Tee analysts said:
“The sales recovery is in-line with our earlier predictions made in July, where we anticipated that sales will likely fall immediately after the cooling measures but recover about two months later. The predictions were made based on our data analysis where we observed that new sales volume recovered to their pre-measure levels one month after ABSD1 and two months after ABSD2.
“The sales rebound in September could be attributed to more projects being launched last month that might have spurred buying interest. The number of launched units (including ECs) rose 119 per cent from 534 units in August to 1,169 units in September. Some major project launches include Jadescape, The Jovell, Mayfair Gardens and Jui Residences. These four projects accounted for more than half of September’s new home sales (51.6 per cent or 481 units).
We have also observed healthy sales at some existing launches like The Tapestry, Affinity at Serangoon, The Tre Ver and Riverfront Residences as buyers may have decided to proceed with their purchases after making market comparison. Those waiting on the sidelines may have also decided to make a purchase now since prices have remained stable and the lunar ghost month is over in early September. Some buyers may have switched their buying interest to new home sales as prices of resale homes are holding firm. Individual resellers may have been reluctant to drop prices as the economy and job market is still healthy.”
The tighter financing rules and increased Additional Buyers’ Stamp Duty of up to 20 per cent for foreign condo buyers have clipped foreign buying interest further.
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In giving further breakdown of data on condo buyers last month, Orange Tee said:
“Based on URA realis data (downloaded on 15 Oct 18), foreigners’ share of the new non-landed housing pie sank even lower to 4.2 per cent last month, down from 5.8 per cent in August and 10.8 per cent y-o-y. The last low was in Apr 09, when foreigners accounted for only 4.1 per cent of the market share. In contrast, Singaporean purchases remained resilient, rising 1.5 percentage points y-o-y to 83.6 per cent in September.
As the return in demand is underpinned by strong economic fundamentals, we foresee that buying activities will pick up further as more launches are on the cards, including The Woodleigh Residences, Parc Esta, Kent Ridge Hill Residences and Whistler Grand that are slated to be launched over the next two months. We have revised our expected full-year new home sales upwards to be between 8,500 and 9,500 units.”
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Commenting on the data by URA on new home sales, Desmond Sim, Head of Research for CBRE Singapore & Southeast Asia said: “While demand exuberance is restrained by existing measures, developers are also observed to be phasing out their launches, drip-feeding the market with supply so as to react to market movements accordingly.
“At the same time, new thematic selling points were also employed in attempts to harness sales; Jadescape and Mayfair Gardens accounted for almost 44% of this month’s total sales. Patchy sales from other launches propped up the remaining sales figures. With a strong projected pipeline of launches, CBRE maintains its forecast of 8,000-10,000 units for 2018, driven by total price quantum supported by smaller unit sizes.”
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