Lack of new home sales, OTP drove lower sales, but market sentiment remains positive.
October’s private new home sales dropped to more than half of the units sold in September, weighed by lack of new launches during the month and the economic downturn.
Private new home sales shrunk 51.7% MoM to 642 units (excluding executive condominiums, or ECs) in the past month, from 1,329 units sold in September, according to the latest data from the Urban Redevelopment Authority (URA). Compared to October 2019’s 932 units sold, new home sales were 31.1% lower.
Overall, developers have sold a total of 8,021 new units in the first 10 months of the year, or 4.5% YoY lower than the 8,401 units moved in 10M 2019.
Despite the sharp drop in developers’ sales in October, the transaction figure is still considered credible, given the lack of many new launches during the month and the pandemic-led economic downturn. The past few months’ recent run of robust sales the private and public housing segments, resilient home prices, and a gradually recovering Singapore economy have provided a confidence boost for the residential property market, said Siew Ying Wong, head of research & content, PropNex.
“Encouraged by the brisk sales in recent months, we saw developers tabling optimistic bids for development land sites—as seen in the top bids for the Tanah Merah Kechil Link and Yishun Avenue 9 (EC) government land sales plots recently,” Wong noted.
Furthermore, the magnitude of sales decline last month can be attributed to the high base in September where new launches such as Penrose, Verdale and Myra helped to boost sales, contributing to 448 or nearly 34% of the 1,329 units sold in September, the report added.
In contrast, only one new project soft launched in October—Hyll on Holland, which sold 5 units at a median price of $2,729 per square foot (psf). Driving the point, the top 10 best-selling private residential projects for October were all launched previously.
The recent restriction on the re-issue of Options-To-Purchase (OTPs) may also likely have had some impact on sales in October as well, PropNex added.
“The restriction on the re-issue of OTPs which took effect at the end of September probably weighed on sales in October,” noted PropNex CEO Ismail Gafoor.
He added that the halt in the re-issue of OTP may have temporarily put the brakes on the steadily rising new home sales. However, given some time, the market will adjust and sales will likely pick up again.
OrangeTee & Tie’s head of research and consultancy Christine Sun echoed the same sentiment.
“The clampdown on the reissuing of OTP subsequently caused a knee-jerk reaction which resulted in a temporary fall in sales volume last month. As the property market is highly sentiment driven, the pull-back in housing demand is unsurprising,” she said, noting that some buyers could be waiting on the side lines, hoping that developers will moderate prices.
Sales may pick up again once the ‘dust settles,’ she added.
Per region, the Outside Central Region (OCR) led developers’ sales with 292 units sold. The Rest of Central Region (RCR) and Core Central Region (CCR) transacted 283 and 67 units, respectively.
Developers placed 423 new units for sale in October, which is 68.4% from the 1,340 units put on the market in September. This marks the lowest monthly number of units rolled out for sale since the 370 units in December 2019.
Looking ahead, PropNex’s Gafoor expects new homes sales in November and December to do better than October, with the upcoming new launches that include The Landmark, Clavon, and Ki Residences likely drumming up sales.
“Notably, The Linq at Beauty World—launched in [November 14]—has reportedly sold 96% of all units and this will certainly help to lift November’s sales figure,” Gafoor added.
For the whole of 2020, Gafoor projects that developers’ sales could reach 9,500 units, slightly below the 9,912 units transacted in 2019.
OrangeTee & Tie’s Sun also expects the total tally to be between 9,000 to 9,500 units, with between 500 to 700 new units potentially being sold in November and December.
Also, the prospect of the Singapore economy moving into Phase 3 of the re-opening potentially before end-2020, hopes of warmer US-China ties after Joe Biden’s US presidential election win, and recent positive news regarding COVID-19 vaccine development should help to further shore up consumer sentiment and confidence, according to PropNex’s Wong.
Meanwhile, given that fewer new projects could be launched next year especially mega-projects, Sun estimates that around 8,500 to 9,500 new homes could be sold in 2021.
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