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21-06-23, 15:09

New private home sales up 17% in May from April, on the back of a doubling in launches

Ry-Anne Lim

Jun 15, 2023

DEVELOPERS in Singapore sold 1,038 private homes in May, 17 per cent higher than April’s take-up, but fewer than the 1,355 units moved in the corresponding month the year before.

This made for the highest monthly number of private homes sold in a year, noted Christine Sun, OrangeTee & Tie senior vice-president of research and analytics.

The figures, which exclude executive condominium (EC) units, were released by the Urban Redevelopment Authority (URA) on Thursday (Jun 15), based on its survey of licensed housing developers.

This came as 1,595 private homes were launched in May – nearly double that of April’s 798 units, and nearly 30 per cent more than the 1,240 units released in May the year before.

May’s surge in private home sales was driven mainly by the launches of freehold development The Continuum and 99-year leasehold condo The Reserve Residences, which collectively accounted for 72.1 per cent of all sales that month, noted Lee Sze Teck, senior research director at Huttons.

The Continuum, promoted as “a landmark project in Katong”, sold 225 of its 816 units at a median price of S$2,720 per square foot (psf) last month, said Lee.

“This is the first freehold project launched with a large land size of above 200,000 square feet, since Haig Court in the Katong area, in almost 20 years,” he added. “A freehold tenure, proximity to good schools and the Paya Lebar sub-regional centre are other reasons drawing buyers to the project.”

Likewise, ERA key executive officer Eugene Lim pointed out that The Reserve Residences in Upper Bukit Timah saw strong demand during its launch weekend in May – more than 70 per cent of its 732 units were sold at an average price of S$2,460 psf then.

The two projects made up 88 per cent of new sales in the city fringe or Rest of Central Region (RCR), said PropNex head of research and content Wong Siew Ying.

RCR sales, in turn, accounted for the bulk of all launches in May, with 1,493 units released. The remaining 102 units were in the prime Core Central Region (CCR); none were launched in the suburbs or Outside Central Region (OCR).

Even with the lack of new launches in the OCR, the median price of new OCR sales increased the most – by 7.5 per cent month on month, noted ERA’s Lim. In comparison, the median price of new private homes in the RCR rose 2.9 per cent and by just 0.8 per cent for those in the CCR.

“It is likely that OCR home prices have more room to grow because of their lower price quantum, relative to the other two market segments,” he said. He added that there may be a growing shift in demand for homes in the OCR market, from buyers who are priced out of the RCR market.

PropNex’s Wong noted that data from URA also showed that around 93 per cent of the units in OCR projects launched for sale have already been sold, presenting fewer available options to buyers.

The best-selling OCR project in May was 99-year leasehold condo, The Botany at Dairy Farm, which moved 16 of its 386 units at a median price of S$2,125 psf.

Despite the surge in launches, Lam Chern Woon, head of research and consulting at Edmund Tie, noted that the take-up rate in May was just 65 per cent – the lowest in over two years.

Among the three market segments, the CCR recorded the strongest take-up rate for the sixth consecutive month, as “the attractively narrow price gap between CCR and RCR of around SS$400 psf drew value hunters to the prime segment”, he said.

Including ECs, which are a public-private housing hybrid, developers sold 1,055 units last month, up 16.1 per cent from the 909 units in April, but 23.3 per cent lower than the 1,375 units moved in May last year.

Impact of ABSD hike

There was a sharp decline in the number of foreign buyers (excluding permanent residents or PRs) in May, primarily because of the hike in Additional Buyer’s Stamp Duty (ABSD) rate, noted Sun from OrangeTee & Tie. For foreigners in particular, the ABSD rates went from 30 per cent to 60 per cent.

The number of new non-landed private homes purchased by this group consequently plunged by 47.8 per cent last month; only 36 units moved, compared to April’s 69. Meanwhile, purchases by PRs rose 39 per cent to 114 units last month, and that of Singaporeans grew 26.9 per cent to 881 units.

At The Continuum, for instance, Singaporeans accounted for around 90 per cent of buyers, and PRs, 10 per cent, said Chia Siew Chuin, JLL head of residential research, research and consultancy.

Some 99 per cent of buyers at The Reserve Residences were also Singaporeans and PRs, she said.

In total, foreign buyers accounted for just 3.5 per cent of all new private home sales in May, down from April’s 8.2 per cent, noted PropNex’s Wong.

“At 3.5 per cent, this would be the lowest proportion since December 2021, when the portion of new non-landed private homes purchased by foreigners was at 3.3 per cent of the monthly total,” she said.

“It may be early days yet, but this could be a sign that the punitive 60 per cent ABSD rate is working through the market and trimming foreign investment demand, as investors assess their options.”

Still, Lee from Huttons highlighted that May’s figures might not fully reflect the impact from the ABSD hike, since there was a transition provision. This allowed some buyers to use the previous ABSD rates if their option to purchase was exercised on or before May 17.

“The full effect of the cooling measure will be evident in June,” said Lee, adding that he expects foreigners to account for just 1 per cent of all buyers. “The top nationality purchasing residential properties in Singapore... could be the US as their nationals are accorded the same tax treatment as Singaporeans.”

In the year to date, some 3,181 new private home sales have been made, with an estimated 8,000 units left to launch for the rest of the year, noted Knight Frank head of research Leonard Tay.

“With the government reporting that 90 per cent of private home buyers comprise citizens and PRs buying their first property, demand for new products will continue to be firm through this year as new projects are launched, so long as the price points are within the affordability levels of this type of buyer,” he said.

“Potential foreign homebuyers are likely to adopt a wait-and-see posture for the time being, to assess the impact of the new measures on the prime segment of the market.”

For the coming month, Mogul.sg chief research officer Nicholas Mak predicts that private home sales are likely to “take a breather”, and then ramp up later in the year with the launches of several major projects. These include the 598-unit Lentor Hill Residences in District 26 and the 520-unit Pinetree Hill in District 21.

He therefore expects developers to sell 6,500 to 7,500 units for the whole of 2023 – a rather “subdued” number when compared with the 10-year annual average of 9,706 units, he said.

“The credit for slowing the property sales should be given to the earlier rounds of cooling measures introduced between 2018 and 2022,” he added.

https://www.businesstimes.com.sg/property/new-private-home-sales-17-may-april-back-doubling-launches