Why analysts are optimistic despite the drop in developer sales

Buyers will still be on the prowl for properties as the market bottoms out.

Developer sales went down by 34.2% in May, with only 1,394 residential units sold. 

Whilst the lack of launches in the said month could have probably led to the slump in developer sales, analysts are optimistic on the outlook of the housing market.

ERA Key Executive Officer Eugene Lim said buyer confidence is still high, given that the number of sales is still high in May.

"Primarily, most buyers are encouraged by the shorter holding period of three years for the payment of Seller’s Stamp Duty (SSD), compared to the four years previously. With the shorter holding period, buyers will have the flexibility to resell the units when the project attains TOP; without having to pay SSD. This allows them to take profit should the opportunity presents itself," he said.

More so, he noted that most buyers are of the opinion that the private residential market is likely to bottom out by this year and prices will progressively increase.

"As such, we are likely to see a sustained buying interest for new projects; going forward.” He also noted that buyers foresee prices going up, prompting them to buy now. "They buy now to avoid having to pay higher prices later on," he added.

He then furthered that on the flip side buyers may be taking the plunge now as prices are still reasonable and attractive.

For PropNex CEO Ismail Gafoor, the trend of strong demand will likely to continue throughout this year. He foresees that the private homes transactions could cross the 15,000 mark by the end of this year.

“More consumers will come to realisation that the market have bottomed out and prices are likely to inch upwards with the strong land bid prices we are currently witnessing. This might it turn propel them to make the move in their property purchases,” he said.

Meanwhile, JLL Head of Research & Consultancy Tay Huey Ying predicts that the developers' sales volume could show a marginal dip in June due to the mid-year school holiday season where a large proportion of potential buyers travel overseas for vacation.

"Sales volume should rebound in July as developers rush to launch projects and buyers rush to pick up units ahead of the lunar seventh month, typically considered an inauspicious period by the Chinese for making large financial commitments," he said.