Singapore's August home sales down 39%

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Singapore's August home sales down 39%

By Ng Baoying, Channel NewsAsia | Posted: 15 September 2009 1746 hrs


SINGAPORE: Singapore's private home sales in August fell 39 per cent short of July's - when a record 2,772 units were sold.

According to data by the Urban Redevelopment Authority, just 1699 homes were sold in August.

According to analysts, while these numbers may be relatively low, they're still better than expected as the Chinese Hungry Ghost Festival typically depresses sales even more.

A dip in the number of developer launches in August saw home sales fall on-month.

"But at current levels, based on sales volume, we are still transacting at above market average of 1,400 units over the last 8 months this year. There were quite a few projects which sold very well in the month of August, for example Trevista, and Viva," said Eugene Lim, Associate Director, ERA Asia Pacific. Trevista is in Toa Payoh, while Viva is in the Thomson area.

Analysts said that the demand is driven mainly by the usual HDB upgraders and investors, who are tempted by relatively low prices and interest rates.

The sales, however, are not expected to return to earlier highs, partly because the last quarter of the year is a traditionally low season for the market.

Furthermore, government measures to prevent a bubble in the property market, announced on Monday, are likely to dampen sentiment.

"Looking at the average take-up per annum in Singapore, it's about 6,500 to 7,500 depending on the period. If you exclude the run-up in 2007, the demand per year is about 6,500, 6,800 - that's about 550 to 600 housing units per month. So, you can expect the next few months' numbers to be around that," Chua Yang Liang, Head of Research, Southeast Asia, Jones Lang LaSalle.

According to analysts, prices are likely to hover around the same levels or go even higher because barring major shocks, there are limited or no downward pressures on prices.

The improving economy and the opening of the two integrated resorts next year are likely to support prices.

- CNA/sc

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Published September 16, 2009

August new home sales slide

Analysts expect sales to remain low for rest of this year

By UMA SHANKARI


(SINGAPORE) The number of new private homes sold in August 2009 fell sharply to 1,699 as pent-up demand eased and developers raised the prices of some newly launched projects.

The slowdown, which was largely expected, came on the back of a record month - 2,772 new homes were sold in July, the highest figure since the authorities started releasing monthly numbers in mid-2007.

The falling sales, combined with Government measures to cool the private residential property market announced on Monday, means that analysts are now expecting substantially lower monthly sales for the rest of the year.

Citing signs of increased speculative activity and a 'significant' rise in private home prices since June 2009, the Government two days ago unveiled a slew of measures including disallowing the interest absorption scheme (IAS) - which helped revive home sales earlier this year after the global financial crash - and the similar interest-only housing loans. The Confirmed List land sales will also be reintroduced from the first half of next year.

'As the new measures are likely to affect market sentiment in the immediate future, the residential sales momentum is likely to moderate in the fourth quarter and further price increases will be checked,' said Li Hiaw Ho, executive director of CBRE Research.

However, most analysts are maintaining their forecasts for transaction volume for the whole of 2009 as they had already factored in the expected decline in sales from August onwards following the peak in July 2009.

Most analysts now expect only about 1,000-1,200 new homes to be sold per month from September to December - although some forecasts are as low as 500 units a month.

CBRE, for example, said that new home sales for the full year should exceed 14,000 units - with a good chance of surpassing the market peak of 14,811 units in 2007. To date, 11,845 homes have been sold in 2009, a large jump from the 4,300 units sold in the whole of 2008.

The two main reasons cited by analysts for the coming slowdown are buyer fatigue and resistance to increased asking prices.

'Sensible pricing and a pent-up demand from the financial crisis led to the astronomical figures in the last few months,' said PropNex chief executive Mohamed Ismail. 'That demand is probably waning, resulting in the 39 per cent drop in units transacted from the previous month (in August).'

But with the measures announced on Monday, prices are now likely to stabilise. Citigroup analyst Wendy Koh, for example, thinks that the new measures could moderate future price increases.

While the mass market segment was the star performer in July 2009, the mid-tier RCR (rest of central region) segment garnered the highest launch and sales volume in August 2009, boosted mainly by Trevista which sold 413 units out of the 590 launched at a median price of $943 per square foot (psf).

Some 722 units were sold in the RCR. By contrast, 449 units were sold in the prime Core Central Region, while 528 new private homes were sold in the Outside Central Region, which is a proxy for suburban mass market locations.

Developers launched 919 units in the RCR in August 2009, up 71 per cent from July 2009. This is the highest number of mid-tier units launched since URA started releasing the monthly data in June 2007. Developers are likely to have been motivated by their desire to ride on the buying momentum from the mass-market segment, which is filtering up to the mid-tier segment, noted Colliers' director for research and advisory Tay Huey Ying. Developers launched 1,641 new units in all in August.

And although interest for luxury properties remained thin, two transactions at above the $4,000 psf level were recorded for August 2009 - Scotts Square ($4,304 psf) and The Orchard Residences ($4,099 psf). The last time the market saw transactions at above the $4,000 psf mark was in May 2008 when four units at Scotts Square were sold at prices ranging from $3,779 to $4,612 psf.

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Sep 16, 2009 Wednesday

Pace of new home sales eases in Aug

Figure dips to 1,699 from July's 2,772 but it's still robust - it was 325 in Aug 2008

By Joyce Teo


THE buying rush that galvanised home sales in July eased off last month, with 1,699 units of new private homes changing hands.

That is still a robust number - only 325 units were sold in August last year - but well under the record 2,772 shifted at breakneck pace in July.

The slower pace of sales was possibly due to the onset of the Hungry Ghost Month, which prompted some developers to lie low as superstitious buyers stayed away.

Developers launched 1,641 units last month, down from 2,878 in July, according to Urban Redevelopment Authority data yesterday.

Some price resistance also set in last month, with potential buyers thinking twice about putting their cash down in the light of rising prices.

At some projects, people returned units they intended to buy, possibly because they felt the price was too high or they had problems securing loans. They lose 25 per cent of their deposit in such a situation.

This has occurred at some new launches like Centro Residences in Ang Mo Kio. It sold 87 units as of end-July and another 17 units last month at a median price of $1,231 per sq ft (psf). Total sales now are at only 91, indicating that 13 units have been returned.

Also, the supposedly sold-out Optima @ Tanah Merah still has three unsold units, data for last month showed.

Overall, however, August figures were still very strong, particularly given the weak economic climate.

The buying sentiment has also trickled down to the secondary market, where prices have risen, said Jones Lang LaSalle.

Only three projects registered impressive sales last month, a far cry from July, when several developments lodged sales of more than 100 units.

The popular 99-year leasehold Trevista in Toa Payoh sold 413 units at a median price of $943 psf last month. It has since sold 469 units out of 590.

Buyers picked up 203 units at a median price of $1,537 psf at the 235-unit Viva in Suffolk Walk. And the Optima sold 164 units at a median price of $843 psf.

The luxury-end segment stayed quiet, though a Scotts Square unit in Scotts Road was sold at $4,304 psf.

Sales are expected to slow for the rest of the year, though, after the Government introduced measures on Monday to calm the fast-rising market and stop any speculative bubble from forming.

It has axed the interest absorption scheme that allows buyers to defer the bulk of the purchase price until the property is completed. Scheduled land sale tenders are also being reinstated.

'As the new measures are likely to affect market sentiment in the immediate future, the residential sales momentum is likely to moderate in the fourth quarter and further price increases will be checked,' said CBRE Research executive director Li Hiaw Ho.

The measures could deflate some of the speculative froth and limit the rate of price growth in the coming months, but they are not expected to derail the property market's recovery, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

Sales are expected to total between 13,000 and 15,000 this year, which will still be one of the highest annual figures in the past 14 years, said Mr Mak.

Some consultants take a more cautious view. Developers are unlikely to delay projects that are already at the advanced stages of launch preparations, said Colliers International director for research and advisory Tay Huey Ying.

It makes sense for them to launch early at current prices instead of at a later date when values may come under pressure from the Government's cooling measures, she said.

Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, noted that the Government has sent a strong message to the market that it will intervene if the strong sales performance gets overtly inflated by sentiments and becomes unsustainable.

While monthly demand for new launches is unlikely to fall to the level recorded after the collapse of Lehman Brothers, a 'more conservative' volume of possibly between 500 and 550 units a month is likely if price and interest rates - the two key driving forces in today's market - remain stable, he said.

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