New Private Homes Sales Hit All-time Low

By iCompareLoan Editorial Team
 

To all eyes the property cooling measures have worked its magic to temper the demand for new homes.

The Urban Development Authority (URA) monthly sale figures for private home revealed a drastic drop in demand for July. A mere 593 units changed hands last month, a decline of 72% from June’s 2,119 units. Excluding executive condominums (ECs), the figure is 481, 73% less than the 1,806 in June.

July’s dismal number is the lowest since December 2009 when only 481 units were transacted. It also surpassed experts’ forecast of a up to 50% drop.

Table 1: New Home Sales Figures

Source: URA

Of the five new property launches in June, only Vue 8 Residence has over 50% of its units sold. The other four turned in poor performance of under 10% sale. We present in Table 2 the exact numbers. The relatively stronger demand for Vue 8 Residence could be due to its more affordable pricing. Its highest per square foot (psf) is below the highest psf price for all the other four projects.

Table 2: New Project Launch in July 2013

Source: URA

Indeed Vue 8 Residence is the best performer, in terms of sale number, for July; followed by Forestville – an EC launched in June – at 78 sold units. While the latter’s sale performance paled in comparison to Twin Fountains EC which had 316 units sold out of 418 in its first month of sale, it still attracted demand. Till date, 304 out of 653 (46.6%) units have been transacted. Selling at a median of $734 psf, with prices between $623 psf and $823 psf, it remains more affordable than a private condominum.

Table 3: EC New Sale in July

Source: URA

Market watchers believe the latest mortgage rules – Total Debt Servicing Ratio – introduced in June 29 (TDSR) is the main culprit for the softer demand in July. Under this rule, borrowers must keep total monthly debt repayment at no more than 60% of their income; consequently some banks take longer to approve home loans as they have to undertake a more rigorous check. This may have curbed impulse buying according to OrangeTee research head, Christine Li, as the approval time for in-principle loan application is also lengthened.

Other analysts believe the slowdown is also a cumulative result of all the various rounds of property cooling measures.

Experts are of the opinions that the stronger take-up rate for ECs in July reflects the more cautious mood of buyers following the many property cooling measures. Usually priced lower than private homes, ECs become full-fledged private condominiums after 10 years and possess comparable facilities to their private counterparts. In June, ECs constitute 14.8% of total new private home sales, but creeped to 18.9% last month.

Analysts believe the overall softer demand for private housings will continue into August as it is the Hungry Ghost month. But sale is expected to rebound in September.

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