New private homes sold in February up 9.9% from January, but down 20.3% year on year

Mar 16, 2023

SALES of new private residential units gained momentum in February, led by an increase in sales in the prime core central region (CCR). However, total sales were still down on a year-on-year basis.

Data from the Urban Redevelopment Authority (URA) on Wednesday (Mar 15) showed that developers sold 432 units, excluding executive condominiums (ECs), in February – up 9.9 per cent from the 393 units moved in the previous month.

New home sales rose despite the number of units launched dipping in February, when there were 2.2 per cent fewer properties launched than the 410 units launched for sale in January.

Year on year, the number of units sold in February was 20.3 per cent lower than the 542 units sold in 2022. But the number of units launched for the month rebounded 105.6 per cent from the 410 units launched in the same month in 2022.

Including ECs, 470 units were sold in February, down from the 550 units sold in January and 574 units sold in February 2022.

The bulk of February’s transactions were from the CCR region, consisting of 51.4 per cent of total sales at 222 units sold, excluding ECs. This was an increase of 40.5 per cent from the 158 CCR units sold in January.

ERA Realty’s chief executive Marcus Chu attributed the increase to some condominium projects in CCR slated to be completed this year, which would attract buyers who prefer to purchase projects that are near completion or newly completed.

He added that, due to rentals in CCR rising significantly over the past year, some tenants have decided to buy new residential properties instead of facing the risk of further rental hikes.

ERA also noted an increase in the number of luxury condos – priced at S$5 million or more – sold by developers in February. A total of 31 new luxury condos were sold last month, with about half of the units bought by Singaporeans.

CBRE’s head of research in South-east Asia Tricia Song noted that seven of the 10 best-performing projects in February were from CCR and on a freehold tenure, indicating that buyers continue to see value in CCR amid the narrowing price gap between new launches in CCR and in the rest of the central region (RCR).

OrangeTee & Tie’s senior vice-president of research and analytics Christine Sun said that the overall sales performance in February was encouraging, given that buyers had to deal with high interest rates, cooling measures and the fact that only one mid-sized and one small project were launched in the month. Most launched projects in CCR continued to clear their unsold units last month, OrangeTee reported.

She added that the increase in buyer’s stamp duty (BSD) on Feb 14 is likely to have a greater impact on the primary market, which has a higher price quantum than the resale market.

URA data indicated that 94.7 per cent of new homes (excluding ECs) were sold for at least S$1.5 million in February, compared to only 53.8 per cent of resale homes that were sold at that price level.

“However, most buyers may not feel that the increase in BSD is excessive, especially if the amount is expressed as a percentage of the total purchase price, and if the homes were bought for owner occupation or a long-term investment,” Sun said.

Huttons senior director of research Lee Sze Teck cited Terra Hill as an example – launched after the increase in BSD, it went on to sell 97 units, the best-selling new project for February.

“Buyers are viewing the marginal increase in BSD as a wealth tax, and it is not deterring them from buying a residential property,” he said.

Foreign buying stayed elevated at 12.6 per cent in February, above the 7.1 per cent level for the whole of 2022, Huttons noted. The 54 units purchased by foreigners were slightly more than the 53 units purchased in January.

According to Hutton’s ground intel, sales were supported by Chinese buyers purchasing some units in luxury projects in the core central region (CCR).

In the rest of RCR, 163 units were sold. Sales outside the central region (OCR) fell 74.7 per cent from January to 47 units, with no new projects launched in the region.

RCR had the highest number of units launched in February at 294, followed by 107 units in CCR. There were no units launched in OCR for the month.

PropNex Realty’s head of research and content Wong Siew Ying said that sales in April and May might increase more significantly with more fairly-sized new projects launching then, including Tembusu Grand, The Continuum, Lentor Hill Residences and The Reserve Residences.

Huttons’ Lee also predicts that Blossoms by the Park and The Reserve Residences will sell more than half their units on launch day, because private homes in the one-north area tend to enjoy strong demand and yield good rents. These two developments are near MRT stations and primary schools.

Wong noted that buyers have become more cautious given the uncertainty of future rate hikes and the long pipeline of new launches to come this year. She expects take-up rates for future launches to be similar to the two most recent launches. Terra Hill was 38 per cent sold on launch day, while Botany at Dairy Farm moved 48 per cent of its units.

“Perhaps some buyers may be hoping for prices to correct downwards amid the ample supply of launches, but we think this is unlikely to be the case, as developers have locked in high land costs for the sites, and are facing rising costs as well,” she added.

Chia Siew Chuin, head of residential research at JLL’s research and consultancy division, attributed the lower year-on-year sales to buyers waiting for more options among the upcoming project launches, with others holding back to monitor the market.

Edmund Tie’s head of research and consulting Lam Chern Woon noted that with buyers remaining price sensitive amid economic uncertainties, upward price pressures are likely to be contained, except for projects with exceptional locations and design attributes.

Huttons maintains its sales forecast for 2023 at around 9,000 units, with prices rising by up to 5 per cent.

Although the fallout of Silicon Valley Bank is not expected to have a material impact on the property market following quick action by the US government, property purchases might get a boost if the Federal Reserve slows down or stops its interest-rate hikes. That would translate to a better interest rate for local borrowers, Huttons’ Lee said.