Slow start to year for developers with lowest January new home sales in 15 years

Feb 15, 2024

NEW private home sales in Singapore doubled last month following the year-end holiday lull. However, analysts noted that volume was low, with sales at their weakest level in 15 years as buyers held back.

According to data released by the Urban Redevelopment Authority (URA) on Thursday (Feb 15), developers sold a total of 281 private homes in January, up 108.1 per cent from the 135 units moved in the month before.

The latest January sales figure, which excludes executive condominiums (ECs), is 28.5 per cent less than the 393 units sold in the same month in 2023.

It is also the lowest January sales since 2009, when developers sold 108 units, reflecting the tentative sentiment among buyers, said Lee Sze Teck, Huttons senior director of data analytics.

Including ECs, 588 units were sold in January with 929 units launched. In comparison, just 152 units were sold and 36 units launched in December.

Meanwhile, the number of unsold units has risen from 6,246 units in December 2023 to 7,936 private housing units (excluding EC) last month, Mogul.sg chief research officer Nicholas Mak pointed out. “This could be worrisome as home buying demand this year could be moderately weak,” he said.

The supply boost in January came from three launches – the 172-unit freehold condo The Arcady at Boon Keng, the 341-unit 99-year leasehold Hillhaven in the Hillview area, and 512-unit Lumina Grand EC in Bukit Batok.

Sell-through rates at Hillhaven and The Arcady at Boon Keng were below 30 per cent, noted Tricia Song, CBRE head of research for Singapore and South-east Asia.

The bulk of new home sales – almost 73 per cent – fell within the price range of S$1 million to less than S$2.5 million, said Chia Siew Chuin, head of residential research at JLL. Deals priced from S$2.5 million to less than S$4 million made up 21.9 per cent, while the remaining 5.4 per cent were transactions valued at S$4 million or more.

Overall, the primary market’s take-up rate remained low in January. Roughly 63 per cent of the number of new units launched in the month were sold, a big contrast from 2022 when numbers sold exceeded units launched for most months, said Mogul.sg’s Mak.

Wong Siew Ying, head of research and content at PropNex Realty, said: “It is possible that many prospective buyers are waiting for more clarity on the market, following a relatively uncertain year in 2023.”

Yet, while higher Additional Buyer’s Stamp Duty rates “will continue to deter foreign buyers and investors, the current market continues to exhibit traction”, said JLL’s Chia, with buying momentum driven by local buyers looking to purchase a home for their own occupancy. But with ample options available among the 12,000 or so units slated to be launched this year, buyers will be sensitive to prices and specific attributes, she added.

ERA key executive officer Eugene Lim noted that more than 90 per cent of the units sold at The Arcady at Boon Keng, as well as all the units sold at Hillhaven, fell within the S$3 million threshold, pointing to buyers being cautious and prudent with their home purchases.

The Outside Central Region (OCR) led in non-landed unit sales, accounting for 51.2 per cent of sales in January. The Rest of Central Region made for 39.9 per cent, while the prime Core Central Region made up just 8.9 per cent of new sales last month.

The best-selling project in January was Lumina Grand EC in the OCR, with 271 units sold at a median price of S$1,525 per square feet (psf). The price tag is a new benchmark price for new EC projects, and the record prices posted at the development may have boosted sales for other available EC projects as their prices are now seen as “more competitive”, said Song of CBRE.

Data from URA Realis showed that 19 new units were sold at North Gaia EC in Yishun at a median price of S$1,306 psf last month. Some 14 new units were also sold at Altura EC in Bukit Batok at a median price of S$1,500 psf, and two at Provence Residence EC in Canberra for S$1,473 psf.

Christine Sun, chief researcher and strategist at OrangeTee Group, believes demand for ECs will remain stable due to their limited supply, affordability and investment potential.

Private home sales may only pick up in a “more meaningful way” from March when more projects are put on the market, said PropNex’s Wong.

The macroeconomic picture also improved in the last quarter of 2023. “The first sign of possible interest rate cuts expected during the course of the year might just be the catalyst to usher homebuyer momentum back into the market,” said Leonard Tay, Knight Frank Singapore’s head of research. “After all, employment levels remain healthy with overall affluence unaffected despite the tepid economy in 2023.”

Developers are expected to sell 7,000 to 8,000 new homes this year.

https://www.businesstimes.com.sg/pro...sales-15-years