Private home sales plunge 4% to a mere 1,348 units in August

Guess which region drives the market with almost 80% of the total units sold?

According to Jones Lang LaSalle, it’s the Outside Central Region, with sales secured on 1,114 units in August, an increase of 48% m-o-m and 103% y-o-y.

According to a release, the URA monthly sales volume for private residential units (excluding executive condominiums (ECs)) decreased by 4% in August 2011 to 1,348 units, a return to the pattern of falling sales seen in May and June 2011. The number of launches however continued to hold up, falling by a marginal 0.1% in August, with just two fewer units being launched than in the previous month. The Outside Central Region (OCR) continues to drive the market, with both sales and launches recording significant increases this month, while the Core Central Region (CCR) saw activity falter.

The OCR recorded monthly sales in excess of 1,000 units for the third time this year, with sales secured on 1,114 units in August, an increase of 48% m-o-m and 103% y-o-y. In fact this is 75% of the peak recorded in July 2009. The OCR continues to be the main driving force behind the sales market in 2011, significantly out performing both the CCR and the Rest of Central Region (RCR) each month.

The OCR also saw a significant increase in the number of launches, with 1,157 units launched in August, up by 117% m-o-m, translating to a take-up rate of 96%, highlighting the residual demand for properties in this submarket. Major launches included Euhabitat, where 526 units were launched with sales of 439 units, Boathouse Residences, where 277 units were launched and 202 sold and The Luxurie with 180 units launched and 151 sold. All three projects were newly launched to the market.

“When we look at the take-up of newly released units, their share of the total transaction volume has grown from a low of 48% in June to 65% by August, suggesting rising market confidence. The fundamental driver - large residual demand as a result of a higher rate of population growth than housing stock, will continue to support the market going forward beyond this current economic uncertainty in the Eurozone” says Dr Chua Yang Liang, Head of Research for South East Asia. “In the wake of the current economic uncertainty, market confidence has weakened and we could expect volume to soften in the September results. Overall property prices may compress if there is further shock to the system but otherwise it is likely to remain fairly stable” he adds.

Outside the OCR, launch and sales activity has fallen significantly this month. In the RCR launches and sales fell by 63% and 68%, respectively, with just 249 units launched and 169 sold. Activity in the CCR continues to contract and just 29 units were launched for sale this month, 20 of which came from just two developments, The Vermont on Cairnhill and Buckley Classique, where 10 units were launched at each project. Sales activity also fell, down by 47% m-o-m to just 65 units.

While sales and launch activity continues to see peaks and troughs on a monthly basis, our analysis of median high and low prices in the OCR shows that the variation in pricing is negligible and has remained relatively stable over the long term.

If we look at the highest median price recorded where more than one unit has been sold in a development, and the same for the lowest median price in the OCR, it can be seen that pricing levels have remained relatively stable over the past two years, especially at the high end. While overall prices have been trending upwards, over the long term this is only equivalent to SGD 0.5 per month for the top end and SGD 0.3 per month for the lower end.

With a few exceptions, the highest median price each month has remained within the range of SGD 1,400 – SGD 1,600 per sq ft, with 18 of the last 24 months recording highest median prices within this range. Similarly, prices at the lower end have also remained consistent, falling in the range of SGD 600 – SGD 800 per sq ft for 15 of the last 24 months.