New private home sales hit two-year high as demand surges

The previous quarter also saw the highest sales volumes since Q2 2013.

Developer sales continue to defy the economic downturn as pent-up demand fueled the third straight month of sales over 1,000 units in September.

A total of 1,329 new private homes (excluding executive condos) were sold during the past month, up from 5.6% MoM from the 1,258 units moved in August, according to the data released by the Urban Redevelopment Authority.

This marks the strongest monthly sales since July 2018, which then saw bumper transactions before the cooling measures took effect on 6 July 2018.

September’s record sales came mainly on the back of a successful new launch, Penrose, in the Rest of Central Region (RCR). Penrose sold 389 units in September, dethroning The M at Middle Road which sold 380 units in February 2020, to become the best-selling new launch in 2020 to date, notes Colliers International’s head of research Tricia Song.

Compared to the previous year, developers’ sales for the month of September rose 4.6% from the 1,270 units transacted last year.

This brings private home sales, excluding ECs, in the quarter of July-September 2020 to 3,670 units—more than double the 1,713 units shifted in Q2, and also an increase of 11.9% YoY compared to Q3 2019’s 3,281 units.

This marks also be the highest quarter of developer sales since Q2 2013’s 4,538 units.

Year-to-date, a total of 7,532 developer units have been shifted, up 0.8% from the 7,469 units sold in the first nine months of 2019.

In September, developers sold 56 ECs—which are a hybrid of public and private housing—9.8% higher than the 51 ECs sold in August, and double the 28 ECs sold in September 2019.

This brings total developer sales (including ECs) in September 2020 to 1,385 units, up 5.8% MoM and 6.7% YoY.

Pent-up demand from buyers who deferred their purchases, coupled with low interest-rates drove the pick-up in sales momentum from both needs-based buyers and those who feared that prices might increase in the near-term, says Leonard Tay, head of research, Knight Frank.

Furthermore, a significant proportion of the almost 50,000 HDB homeowners who collected their keys in 2014 and 2015 were also able to capitalise on their gains and upgrade to the private market, after fulfilling the five-year Minimum Occupation Period (MOP).

Tay also noted that transaction volumes in the RCR reached a new fevered high as developers sold 859 units in September, the strongest showing in both 2019 and 2020 to-date.

As a result of this increasingly encouraging sales volume in the preceding months after the circuit breaker, developers were confident to launch projects such as the Penrose, Verdale and Myra, which drove momentum in the RCR.

However, the Outside Central Region (OCR) and Core Central Region (CCR) saw a slight month-on-month dip in transactions, as demand eased with most of the new launches concentrated in the RCR.

Despite sales volumes in the OCR falling by about 23.9% compared to August, previously launched projects in this region continued to sell at Treasure at Tampines and The Garden Residences.

Despite the strong showing in Q3, Colliers’ Song expects 2020 developer sales to fall by about 10% to 8,900 untis from the 9,912 units in 2019. This was due to URA’s recent decision on the re-issuing of option-to-purchase (OTP) to the same buyers of the same unit, by developers.

“We expect this to have a slight cooling effect on the developer sales from now on, as it should instil greater financial prudence in making property purchase decisions and prevent some marginal buyers from committing prematurely,” Song explained.

Knight Frank’s Tay expects sales to fall on the same spectrum, forecasting year 2020 to end with about 8,000 to 9,000 new home sales in the private market. This is higher than their earlier projection of 6,000 to 7,000 new sales.