Bleak December: Private new home sales drop 58% in the last month of 2021
Analysts said the government's cooling measures may have had an impact on sales.
December was not so festive for the private residential market with private new home sales dropping 58% in the last month of 2021.
Data from the Urban Redevelopment Authority (URA) showed that only 650 new private homes, excluding Executive Condominiums (ECs) were sold in December, lower than November’s figure of 1,547 units.
Including ECs, sales still fell by 55.4% month-on-month (MoM) and 46.6% year-on-year to 719 units in December 2021. There were 69 new units sold in the EC segment last month, representing a 9.5% MoM increase.
EC sales however will likely dip in the coming months as “EC projects continue to pare down their unsold stock,” according to PropNex.
Analysts attributed the overall dip in new private home sales to year-end festivities.
“December’s new home sales slowdown was not entirely unexpected; the muted sales can be attributed to the December holidays and year-end festive season. In addition, with the opening of borders and Vaccinated Travel Lanes, a number of residents have travelled out of the country after more than two years of not being able to travel,” Ismail Gafoor, CEO of PropNex Realty, said.
Huttons, for its part, said December sales usually tend to be lower than November, stating that in the past 14 years, it was only in 2012 and 2020 when December sales were higher than November.
Apart from the holiday season, analysts also pointed out that the government new property cooling measures may have had some effect on the sales for December 2021.
The measures, which were implemented on 16 December, include the raising of the Additional Buyers’ Stamp Duty (ABSD) rates, and tightening of the Total Debt Servicing Ratio threshold.
“The new property curbs may have led some buyers to go back to the drawing board and think through their options,” Gafoor said.
The full effect of the measures however is still not reflected in December 2021’s sales, according to OrangeTee.
This was echoed by Gafoor saying it’s still “too early to ascertain the exact impact of the cooling measures.”
Citing URA realis caveat data, OrangeTee said about 60% of the sales transactions for new homes, including EC, were closed in the first half of the month while 289 units were sold in the second half.
OrangeTee also pointed out that the 137-unit Mori at Guillemard Road, which was among the three new launches in December, was also launched before the cooling measures came into effect. A total of 71 out of 137 units were sold in Mori.
Meanwhile, Perfect Ten at Bukit Timah Road which was launched after the implementation of the measures only sold 11 out of its 230 units.
“Therefore, January’s sales figure may provide a clearer picture of the full impact of the property curbs,” OrangeTee said.
“We expect the pull-back in sales to be temporary. Based on past records, a moderate number of new homes were sold for about seven months after property cooling measures were imposed in July 2018, when ABSD rates were raised and LTV was tightened,” the analyst added.
The muted sales in the private residential market will likely continue in January and February due to the Chinese New year festivities and a limited number of new launches, according to Wong Siew Ying, head of Research and Content of PropNex Realty.
“Sales will likely start to pick up thereafter, as more projects come on the market,” Wong said.
Launches for 2022 include the 107-unit Belgravia Ace along Ang Mo Kio Avenue 5, and the 105-unit The Arden in Phoenix Road.