In a softening property market, new-home sales fell almost 60% year on year in July

Only 571 homes were sold last month as purchasers were choosy and cautious.

Aug 15, 2024

NEW private house sales fell by over 60% year on year in July, as purchasers remained choosy and cautious amid a declining property market.

According to statistics issued by the Urban Redevelopment Authority (URA) on Thursday (August 15), developers sold 571 private residences in July, a 59.6 percent decrease from the 1,413 units sold a year before.

The current sales total, which includes executive condos (ECs), is the lowest for July since 2014, when 511 properties were sold. It is also much lower than the 10-year average of around 1,280 units sold in that month.

Tricia Song, CBRE's director of research for South-east Asia, ascribed the low sales number to purchasers' reluctance, which has persisted in the face of poor economic circumstances and high lending rates.

According to Wong Siew Ying, head of research and content at PropNex, purchasers have grown more discerning and price-conscious, searching for possibilities with the greatest value propositions as property prices have risen and market mood has become cautious.

"Given the ample... new launches to come, many prospective buyers are also in no hurry to commit, preferring to wait for new projects," she wrote.

According to Knight Frank research chief Leonard Tay, the standoff between buyers and developers has resulted in primary market take-up rates ranging from 20 to 30%.

This is a stark contrast to past years, when take-up rates ranged from 60 to 70 percent or more.



However, the 571 deals in July were more than twice the 228 units sold in June.

Including ECs, 608 units were sold in July, with 616 units launched, compared to 1,472 sold and 2,156 launched in the same month of 2023. In contrast, 278 units were sold and 118 units were introduced in June 2024.

The recently opened Kassia condominium in District 17 was the best-selling project of the month, with 154 sales (55.8% of its 276 units) at a median price of S$2,049 per square foot.

According to Marcus Chu, chief executive of ERA Singapore, over 87 percent of these sales were for less than S$1.5 million. "This... is revealing of a growing buyer preference for new private homes with a more digestible quantum," said the economist.

Lee Sze Teck, Huttons Asia's senior director of data analytics, said that Kassia was particularly appealing to homeowners since it was the first big freehold condominium developed in the suburbs since 2021.

On the developer side, Mogul.sg's chief research officer Nicholas Mak said that many are focussing their efforts on clearing their existing inventory before launching new ventures.

According to Mak, developers have increased sales commissions and cash incentives by 50 to 100 basis points to "encourage property agents to push the sales".

"Currently, the sales commissions of some residential projects can range from 2.5 per cent to as high as 5 per cent for a project with a handful of unsold units."

Analysts estimate private housing demand to continue somewhat modest in the present macroeconomic environment.

Tay of Knight Frank anticipated that the sales volume for 2024 would be between 4,000 and 6,000 units, down from his previous estimate of 7,000 to 9,000 deals. "However, there is reason to be hopeful," he told me. "Compared to any other time this year, the likelihood of interest rate cuts is now more certain than ever."

This will encourage homeowners who are on the fence about making a purchase, he noted.

Similarly, CBRE's Song predicts 5,500 to 6,500 new residences will be sold this year. "Attractive developer pricing remains key to healthy new launch performance," she told me. Private property prices are expected to steady, climbing up to 4% this year, she said.

"A big correction is not envisaged, given the low unemployment rate, strong household balance sheets, and minimal unsold inventories. Barring a significant economic shock, the strong public housing market may continue to sustain the (suburban and city edge) private markets."