New private home sales up in July, driven by AMO Residence transactions

Aug 16, 2022

NEW private home sales rose month on month in July, according to data released by the Urban Redevelopment Authority (URA) on Monday (Aug 15).

Developers sold a total of 834 units excluding executive condominiums (ECs), while 402 units were launched. These was up from 488 units sold and 397 units launched in June.

Including ECs, 846 units were sold in July with 402 units launched, compared to the 496 units sold and 397 units launches recorded in June.

URA data showed that more than half of the take-up of private residential units (excluding ECs) were in the outside central region (OCR) with 485 units sold. This was followed by the core central region (CCR) and the rest of the central region (RCR) or city fringe with 185 and 164 units sold, respectively.

Huttons Asia’s senior research director Lee Sze Teck attributed the 70.9 per cent month-on-month jump in July sales figures to “astounding sale results” for AMO Residence, with 366 units sold in the month contributing to a spike in sales for the OCR.

The Ang Mo Kio project being built by UOL Group : U14 +1.09% marks the first major launch in the OCR for 2022, and is also the largest suburban condominium launch so far this year.

“The good sales at AMO Residence could be attributed to the severe lack of new home supply in the suburbs. There has not been a mid-size condominium launch for almost a year. AMO Residence is the only OCR condominium new launch above 350 units (not an EC) since the launch of Watergardens at Canberra (448 units) in August 2021,” commented Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

Other best-selling projects in July highlighted by OrangeTee & Tie’s Sun include Hyll on Holland, Riviere, Parc Clematis, Ki Residences at Brookvale, Perfect Ten and The Florence Residences.

While Sun highlighted “significant pent-up demand for new homes in the suburbs” and a lack of significant impact of the recent interest rate hike on new home-buying sentiment in July, she believes Singapore’s property market will continue to face headwinds from the rising global inflation, interest rate hikes and supply chain disruptions.

“Homebuyers may not feel the increase in monthly instalments due to the progressive payment schedule for new launch private properties, and home loans tend to be smaller in the initial repayment period,” she said.

Lee of Huttons also noted a rise in mass market homes priced above S$2 million, with 40.6 per cent of July’s transactions in the OCR recorded at S$2 million and above compared to a low of 9.9 per cent in August 2021.

“During this period, the average size of S$2 million homes in the OCR decreased from 1,447 square feet (sq feet) in January 2021 to 1,222 sq ft in July 2022. However, the average price per square foot (psf) increased from S$1,579 psf in January 2021 to S$2,066 psf in July 2022,” observed Lee.

Going forward, he expects the proportion of homes at an average price of S$2,000 psf to rise.

Knight Frank’s head of research Leonard Tay believes July’s URA developer sales data reflects growing demand for new high-rise homes in the suburbs, as “HDB upgraders and new families who have the financial means harness steadily-improving affluence to purchase private homes”.

He sees the current pace of sales as indicative of the type of demand that has resulted from an increase in the overall household net worth of Singapore residences over the past decade.

“Looking at the remaining 5 months of the year, quality projects with preferred attributes such as proximity to MRT stations and popular schools, good layout and design, will be able to capture public imagination and the interest of homebuyers, translating into headline news on the launch weekend,” said Tay.

Huttons’ Lee is however anticipating a “quiet” August for developers this year as they hold back on launches during the lunar seventh month.

“The number of units sold (in August) is estimated to be around June’s sales volume. Launch activity will pick up rapidly in September with a number of launches – Enchante in CCR, Lentor Modern and Sky [email protected], both in the OCR,” he said.

He projects developer sales to come in at around 9,000 units for the whole of 2022, with private home prices expected to increase by 8 per cent.

ERA Realty Network thinks total sales volume could range between 8,500 and 9,500 units for the whole of this year. Like Huttons’ Lee, ERA chief executive Marcus Chu foresees upward pressure on residential prices in the coming months as strong demand depletes the current stock of unsold residential units.

“Furthermore, developers are unlikely to lower prices of their residential projects due to the rising land and construction costs,” said Chu.

He added that homebuyers “may not be too perturbed” by the prospects of higher mortgage rates as they “do not expect interest rates to stay at an elevated level for very long”.