Developers’ sales fell sharply in December 2019

Developers’ sales fell sharply in December 2019 in the absence of any new project launches, noted real estate services New private home sales came in at 538 units (excluding Executive Condos) last month, markedly lower than the restated 1,165 units (excl ECs) transacted in November.

On a year-on-year basis, developers’ sales were down by 10.6% from the 602 units sold in December 2018.

For the whole of 2019, Colliers estimates that developers sold 9,849 new private homes (excl ECs), up 12% from 2018’s 8,795 units. This is the highest annual figure since 2017’s 10,566 units, signaling the gradual acceptance of the cooling measures which were implemented in July 2018.

Typically, take-up has been supply-led, Colliers said that it will not read too much into the developers’ sales decline just yet, in view of the dearth of new launches.

It added, “In our view, the number of units sold last month was not shabby given that there were no new project launches at all during the month. Last month, developers placed 370 new units (from previously launched projects) on the market, substantially lower than the 947 units rolled out in November. For the full year 2019, 11,446 units (excl ECs) were launched for sale, compared with 9,121 units (excl ECs) launched in 2018.”

The best-selling private residential projects in December were: Parc Botannia which sold 49 units at a median price of SGD1,345 psf; Parc Esta which moved 45 units at a median price of SGD1,666 psf; Parc Clematis which shifted 40 units at a median price of SGD1,638 psf; and Jadescape which transacted 37 units at a median price of SGD1,715 psf.

Top 10 Selling Projects in December 2019 (including EC)

Source: Colliers International, URA

Ms Tricia Song, Singapore’s Head of Research for Colliers International, commenting on the developers’ sales said:

“We estimate around 128 units which were previously sold were “returned” in December – which represents a return rate of about 11% based on November’s monthly sales (1,165 units). Broadly, we think a return rate of 8-10% is reasonable as buyers may have backed out from the option-to-purchase after a change of mind or were unable to obtain financing.

Prices were little changed in December from the previous month. Meanwhile, we see progressive takeup at earlier launches, underscoring the resilient demand. We note that buyers continue to be value-conscious, gravitating towards projects with good locational attributes (near transport links, good schools) and affordable price quantum. In addition, the sweet spot continues to be family-sized units of two-bedders and three-bedders priced between SGD1million and SGD1.5 million. We estimate 78% of the total developer sales in 2019 were priced at the median price of SGD1,000-2,000 psf.”

In Projecting its Outlook on Developers’ sales Colliers said:

“We believe home sales will continue to be resilient in 2020, supported by several factors: more stable economic growth (Oxford Economics projects that the Singapore economy could grow by 1.4% in 2020); the low interest rate environment; low unemployment rate in Singapore; relatively healthy household balance sheet; available pool of genuine buyers; and no exuberance in the market, thereby reducing the risk of the government imposing new cooling measures.

To ensure the property market remains stable, we believe the government will keep the existing property curbs in place, with little chance of unwinding any measures, barring a severe economic downturn.

For the full-year, we expect developers could sell about 9,800 new homes, similar to the 9,849 units shifted in 2019. While there would be fewer new project launches in 2020, with around 45% of these new launches located in the prime locations in the Core Central Region (CCR), buyers would likely dip into earlier launches for choice and diversity to fit their budget. Meanwhile, we project that private home prices could grow by 3% in 2020, tracking the recovery in economic growth.”

Orange Tee commenting on the developers’ sales said, “sales dipped month-on-month owing to a dearth of new launches and year-end holidays.” It noted:

“Only 370 units were launched in December 2019. Many developers have held back their official launches in anticipation of a resurgence in buying interest, which usually occurs at the beginning of the year when buyers start returning after the year-end holidays. About 30 launches have already been lined up for the first half of this year, with about 50 per cent located in the Core Central Region (CCR) and the rest evenly spread between the Rest of Central Region (RCR) and OCR.

538 new homes were sold in December 2019, 10.6 per cent lower than the 602 units sold over the same period last year. Including executive condominiums (EC), developers sold 551 units last month, registering an 8.9 per cent y-o-y decrease from the 605 units. The best-selling projects were Parc Botannia, Parc Esta, Parc Clematis, Jadescape, and One Holland Village Residences.

Economic fundamentals like GDP and income growth, macroeconomic performance, and employment rates will continue to impact the private residential market this year. Buyer sentiment is expected to remain positive since most economists feel that the worst of economic storms could be over and global growth to rebound. We anticipate that demand for new homes may remain robust, and the new sales volume could hover between 9,000 and 9,800 units for the whole of 2020. Prices of new homes may continue to rise this year around 2 to 4 per cent.”