Perk-up in developers' private-home sales likely to continue in November.
The revival in developers' private homes sales last month - sparked by new launches Forest Woods and The Alps Residences and supported by sales from earlier launches - is expected to continue this month.
Two new major condo developments have hit the market this month so far - Queens Peak near Queenstown MRT station and Parc Riviera in the West Coast.
Urban Redevelopment Authority (URA) data released on Tuesday shows that developers found buyers for 1,252 private homes last month. This was more than twice the 509 units they moved in September, and the 549 units sold in October last year.
Last month's sales were the highest in any month so far this year; it was also the best showing since the 1,655-unit primary-market sales recorded in July 2015.
These figures exclude executive condos (ECs). Buying interest was reignited by the launch of Forest Woods, attractively located near Serangoon MRT station and Nex mall, and The Alps Residences, an affordably priced project in Tampines.
A City Developments-led consortium sold 364 units in Forest Woods at a median price of S$1,412 psf in October; MCC Land moved 334 units at The Alps Residences at a median price of S$1,078 psf.
These projects accounted for just over half (56 per cent) the total number of private homes sold in the primary market in October.
However, industry players acknowledge that sales at some new launches have lately been fuelled by investment demand. A mid-sized developer told The Business Times: "The bulk of demand is for one- and two-bedders, rather than the bigger units, which would typically be sought after by owner-occupiers."
Agreeing, a consultant said that for one-bedders, (a price of) S$600,000 to S$700,000 is quite sweet. For two-bedders, up to S$800,000 is quite acceptable. Three bedders and larger units are more for owner-occupiers - and for this segment of buyers, livability, the size of rooms and proximity to schools are important factors. Softening property prices, low interest rates, high liquidity and a dearth of appealing investment alternatives continue to endear property to investors, he said.
That said, property consultants said developers will have to remain mindful about keeping prices competitive, given price resistance.
A number of issues continue to plague private home sales - the mounting supply of new private residential property completions which will continue to drag rentals, the ongoing strict financing regime and inertia to commit on the part of buyers, who anticipate further price declines.
In the first 10 months of this year, developers sold 6,908 private homes, up 8.2 per cent from the 6,386 units they moved in the same period last year. Most analysts expect the figure for the whole of 2016 to surpass last year's 7,440 units.
For ECs, (a public-private housing hybrid), developers sold 288 units last month, slightly more than the 260 units moved the month before, and the 275 units in October 2015.
In the first 10 months of 2016, 3,553 EC units were sold in the primary market, up 57.8 per cent from the 2,252 units in the same period last year. EC sales for full-year 2016 are expected to exceed the 2,550 units last year.
ERA Realty Network's key executive officer Eugene Lim pegged the full-year figure at 4,000 to 4,500. ECs have turned in a better performance in the year to date, despite there having been no new launches for them since July. This could be because some potential buyers in the private housing market may have opted for ECs instead.
Primary-market sales in the private-housing segment have also fared better this year despite fewer projects launches. In the private-housing segment, an indicator of improved demand is the monthly take-up in previously launched projects. These projects averaged 512 units in the first 10 months of 2016 - 23 per cent more than the 416 units moved in the same period last year.
This trend suggests that primary-market sales volume could have bottomed out, barring a major shock to the economy. Stability in sales volume would eventually lead to stability in prices and pave the way for a market recovery.
Developers' sales could fall to between 700 and 1,000 private residential units this month and to between 500 and 800 units next month. Developers are expected to avoid launching major new projects for the rest of the year, given the start of the school-holiday season. Despite a hiatus in new launch activity, the four big projects released in October and November, as well as projects released earlier, will provide sufficient supply of new homes for buyers, say market watchers.
The lull in launches could stretch until the Chinese New Year in late January. Launch activity is likely to resume after mid-February and continue in March and April.
Major launches expected for next year include The Clement Canopy in Clementi Avenue 1 by a UOL Group-Singapore Land tie-up; and the Abu Dhabi Investment Authority and Lendlease's Park Place Residences in Paya Lebar; in New Upper Changi Road, Chip Eng Seng is expected to release a condo of about 720 units.
Adapted from: The Business Times, 16 November 2016