New home sales see strong rebound in May, up 75.5%
First published on EdgeProp Singapore by Timothy Tay on 15 June 2020
SINGAPORE (EDGEPROP) - New private residential sales in Singapore posted a strong rebound last month, jumping 75.5% from 277 units sold in April to 486 units in May, based on the latest sales figures from the URA. Including executive condominium (EC) units, new home sales over the same period increased by 73.7% from 293 units to 509 units.
Christine Sun, head of research & consultancy at OrangeTee, says: “Last month’s returning demand exceeded market expectations, given the 'unprecedented' levels of economic uncertainties and the circuit breaker measures. The unexpected sizzling sales came as a welcome relief to many in the industry.”
In April this year, property sales took a beating as market activity was hindered by measures to contain community spread of Covid-19. The move saw the closure of showflats, which still remain closed, and homebuyers and agents have had to rely on virtual home viewings to make purchase decisions.
The sales volume last month is 48.9% lower than the 952 new private residential units sold in the same period last year. Over the first five months of this year, developers have sold 2,912 new private residential units which translates to a 17.4% decline from the 3,527 units sold over the corresponding period last year.
Last month, projects in the suburbs, or Outside Central Region (OCR), chalked up the most number of new home sales, with 256 new private units sold. Meanwhile, city-fringe areas, or the Rest of Central Region (RCR), recorded 189 new home sales, and developments in the Core Central Region (CCR) pulled in 41 new sales.
“The rebound in sales witnessed in May was predominantly driven by better take-up in the city-fringe and mass-market segments, as a handful of competitively-priced projects continued to shift units at a steady clip,” says Wong Siew Ying, head of research and content at PropNex Realty. She adds that the latest sales performance offers optimism for June due to pent-up home buying demand and travel restrictions keeping families in the country.
URA sales data also shows that the median price of units transacted last month fell by 15.3% from about $1.43 million at the start of the year to $1.21 million. According to Desmond Sim, head of research, Southeast Asia, at CBRE: “Anecdotal evidence has also pointed to some developer discounts and incentives which may have helped to give buyers the final push, particularly for those who have been waiting on the sidelines, possibly from the end of last year.”
Developer Prominent Land also offered discounts for the remaining units at its boutique, 27-unit, freehold development, 38 Jervois. The units were offered for sale by expressions of interest, with discounts of 13% to 24% from the list prices.
On top of attractive prices, Lim says that the lower interest rate environment is also a much needed jolt, adding that “uncertainties and fluctuation in the equities and bond markets may have also motivated some buyers to look back into residential properties, which have long been regarded as a safer haven”.
According to Nicholas Mak, head of research and consultancy at ERA Realty, the sales figure in May is remarkable, given the lack of new project launches which typically drive monthly new home sales. He adds that most developers are waiting to launch their new residential projects when showflats are allowed to reopen.
Mak says that most home buyers adopted a “wait-and-see” approach and largely put off their purchase plans when the circuit breaker measures were imposed from April 7. “When the government extended the partial lockdown into May and showflats continue to remain closed during One of the partial lifting of the circuit breaker, some buyers may feel that there is no point to continue to put off their home buying plans,” says Mak.
Sun of OrangeTee says that some affluent investors may be making a purchase now out of “fear of losing a good deal”, expecting prices to recover since the coronavirus outbreak is abating in some countries and many major economies are gradually reopening. She adds: “Others could be enticed by the attractive pricing of some private homes as developers (in Singapore) have generally adopted a measured approach in their pricing strategies.”
Looking ahead, property consultants have a mixed view of the property market this year. Desmond Sim of CBRE expects to see the new home sales volume for the whole year to come in between 4,000 and 5,000 units, on the back of economic uncertainty that is likely to worsen in 2H2020.
Mak of ERA expects the full-year sales figure to range from 6,500 to 8,000 units sold, still lower than the 9,912 units transacted in FY2019.
Meanwhile, PropNex CEO Ismail Gafoor says the sales volume could come in at 7,000 to 7,500 units transacted, “barring a second wave of infections and widespread job losses”. He adds: “We believe developers’ sensitive pricing strategy, the low interest rate environment, and the long-term prospects of the property market in Singapore will continue to underpin demand for choice homes.”
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