Analysts see slight lift from foreign demand in Singapore property in Q4 2021

Oct 15, 2021

ANALYSTS have flagged a possible lift in foreign demand in Singapore properties as Vaccinated Travel Lanes (VTL) open up.

This comes as the year-to-date tally has already beat total sales in 2020.

While September recorded the second consecutive monthly dip in new private home sales, it was also a month when developers held back on major launches.

Excluding executive condominiums (ECs), September saw 210 new private homes enter the market. This is the second lowest monthly launch for the year 2021 after February’s 167 units, noted Mark Yip, chief executive officer of Huttons Asia.

Following this, developers sold 834 homes in September, down 31.4 per cent from August's 1,216 units, data from the Urban Redevelopment Authority (URA) showed on Friday (Oct 15).

In comparison, 645 units were moved in February.

"The number of units launched for sale in September was even lower than that in April and May 2020 when Singapore went into Circuit Breaker," Yip added.

The two months saw 277 and 487 units taken up, respectively, based on URA data.

Yip noted that this shows that market demand remains "healthy".

Nicholas Mak, ERA's head of research and consultancy, added that the figures are still within "sustainable" levels. He noted that over the past seven years, the average number of monthly new private home sales was 738 units.

"Furthermore, last month’s decline was from a high base in August, which saw developers sell 1,216 private housing units. The primary market sales are unlikely to stay above 1,000 units every month," Mak said.

Christine Sun, OrangeTee & Tie's senior vice-president of research and analytics, added: "As Singapore embarks on the endemic road map and more restrictions are expected to be lifted in the coming months, market sentiment is likely to remain positive."

She added while more foreign buyers re-enter the market, transactions could also be boosted by purchases from Singaporeans and permanent residents returning home.

However, Sun noted that there may not be an immediate spike in the numbers as measures like the Additional Buyers' Stamp Duty (ABSD) are still in place.

Comparing year-on-year, September’s figures are 37.2 per cent lower than the 1,329 new private homes sold during the same period in 2020.

Including executive condominiums (ECs), which are a public-private housing hybrid, sales reached 1,296. This is 2 per cent lower on a month-on-month basis, and 6.4 per cent lower year on year.

Friday's sales figure was marginally higher than consultants' flash estimates.

Most of the sales in September, excluding ECs, were in the Outside of Central Region or OCR (42.7 per cent), followed by the Rest of Central Region or RCR (37.2 per cent) and the Core Central Region or CCR (20.1 per cent).

Yip suggested that increased sales in the CCR could be due to changes in home-school distance calculations for Primary 1 registrations in 2022.

"Several projects such as Fourth Avenue Residences and Leedon Green benefited from the change in school-home distance calculation for 2022 P1 registration. These two projects are the top two selling projects in CCR in September," he said.

He added that the area’s sales could be boosted by buyers seeking attractively priced projects ahead of repricing in 2022.

"Savvy investors realised that by paying a bit more, they get a better deal in the CCR. As a result, the proportion of purchases priced at S$2 million and above rose to a high of 35.5 per cent in September on the back of more transactions in the CCR," Yip said.

That said, the OCR has also seen a "record number" of new condominiums sold at higher prices, according to Sun.

She noted that 583 non-landed homes, excluding ECs, in the OCR were transacted for more than S$2 million each in the first nine months of this year.

In contrast, 312 non-landed homes in OCR were transacted for the same price range in the whole of last year, while 102 of such transactions were registered during the pre-pandemic 2019.

"As land prices continue to rise, more record-breaking transactions may be expected next year," Sun said.

Islandwide, developers are estimated to have sold 10,100 units in the first nine months of 2021.

"This is 1.2 per cent higher than 9,982 units sold in the whole of 2020," Yip said.