New home sales in July reach an all-new-high since 2021
Around 6,500 to 7,500 new private homes will be sold during the year.
New home sales reached 2,156 units in July due to new property launches, marking a high since January 2021's 2,600 units, CBRE reported.
During the month, new developer sales (excluding ECs) surged over five-fold month-on-month to 1,412 units from June’s 278 units, a 68.9% increase year-on-year (YoY) from July 2022's 836 units.
This set the highest monthly sales for 2023 and since November 2021's 1,547 units.
Despite high-interest rates, tightened financing, and economic challenges, the strong demand for new projects with appealing locations drove these results.
In the seven months to July, new home sales stand at 4,795 units, slightly down by 5.2% YoY from the corresponding period in 2022.
“July saw four major new launches, 2 from the RCR – Grand Dunman (1,008 units) and Pinetree Hill (520 units) – and 2 from the OCR – Lentor Hills Residences (598 units) and The Myst (408 units),” CBRE commented.
However, the sentiment has weakened, with August's new launches showing poorer sales performance.
Altura EC and The Lakegarden Residences launched in early August sold 220 (61%) and 71 (23%) units respectively, while the three projects launched at the second weekend of August only managed to sell 53 units.
Particularly struggling were projects in the CCR – Orchard Sophia sold 19 or 24% of its 78 units, TMW Maxwell sold 7 or 2% of its 324 units, and The Arden in the OCR sold 27 or 26% of 105 units.
The slowdown in new launch uptake is evident.
In 2022, 15 new private residential projects with 4,528 units were launched, whereas in 2023, up to the weekend of 12 August, developers launched 17 projects with 6,773 units.
Pent-up demand seems absorbed, and genuine buyers now face an abundance of choices. Rising prices and cooling measures might limit investor interest, especially for projects with foreign buyers.
Considering the current backdrop, elevated interest rates, and cooling measures, demand has slowed, particularly with the influx of new launches in the past two months.
Upcoming launches include J'den, The Hill@one North, and Newport Residences.
What to look out for?
CBRE Research predicts 6,500 – 7,500 new private homes to be sold in 2023, comparable to 2022's 7,099 units, the lowest in 14 years since 2008's 4,264 units.
Reflecting the 27 April 2023 cooling measures, CBRE Research believes home prices, which increased 3.1% in the first half of 2023, have peaked and will likely stabilise in the coming quarters.
A significant price correction isn't anticipated due to low unsold inventory and healthy household balance sheets, unless there's widespread retrenchment and a sustained recession.
CBRE Research maintains a 3% growth forecast for private home prices in 2023, slower than 2022's 8.6%, largely due to a weaker economic outlook – MTI forecasts 0.5 – 1.5% GDP growth for 2023, compared to 3.6% in 2022.