December healthy home sales came as no surprise

January 13th measures crucial in setting the tone moving forward.

Here's analysis from Alan Cheong, Senior Director, Savills Valuation and Professional Services:

The December new home sales of 1,410 units, excluding Executive Condominiums, came in within expectations. We had expected 1,300 unit sales. This brings the full year non-EC new home sales to 22,290 units, within our 22,000 – 24,000 units range.

Much of the bump up in sales from November’s 1,097 units was attributed to the successful launch of Echelon, which recorded 331 units, 170 units from D’Leedon and 103 units from Eco Sanctuary.

The prices achieved for some of the new launches in late-December is not far from our forecast of a 10-15% price rise for 2013. With transactions expected to remain low this February and March and with January prices carrying over from those of late-December 2012 levels, the price increase for 2013 would be front loaded to the first quarter of this year.

Moving forward, we expect developers to maintain prices as their land costs from GLS sites had risen significantly throughout 2012. The latest round of property measures may induce the industry to adjust their land bid prices down for 2013 whilst holding sale prices firm. The extra margin would permit developers to account for the increased risk after the latest measures or even further measures in future whilst defending their inventory costs.

The immediate weeks following the January 13th measures will be crucial in setting the tone for new home sales this year. If a developer could take leadership, launch and successfully market a reasonably large project soon, the market will interpret this very positively. For example, just after the first ABSD measure in December 2011, the successful launch of Watertown in February 2012, assuaged the frayed nerves of both buyers and sellers.

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