Fear of missing out and talk of cooling measures nudge new home sales up 32.2% in Jan 2021
Private residential sales figures for January 2021 show that developers sold 1,609 homes excluding Executive Condominiums (ECs). This is a 32.2% m-o-m increase from the 1,217 units sold in December 2020, and a 159.5% increase from the 620 units shifted in January 2020.
According to Tricia Song, head of research for Singapore at Colliers International, the latest surge in developer sales comes on the back of increased concerns about possible property cooling measures.
Last month, Deputy Prime Minister Heng Swee Keat and Minister of National Development Desmond Lee gave veiled warnings of the possibility of more property market curbs, while reiterating the government’s objective of keeping housing prices in line with economic fundamentals.
Song adds that last month’s sales figures are the highest monthly sales since July 2018 when 1,724 units were sold. The majority of developer sales during that month occurred when buyers rushed to purchase units before property cooling measures came into effect on July 6 that year.
The buying momentum in January 2021 was likely buoyed by strong take-up rates at two new launches, Normanton Park and The Reef At King’s Dock, while the launch of EC project Parc Central Residences was also well received, says Ismail Gafoor, CEO of PropNex Realty.
The mega-sized 1,862-unit Normanton Park sold 625 units (33.6%) and achieved a median price of $1,763 psf. This made it the best-selling project of the month, followed by the 429-unit The Reef At King’s Dock which shifted 221 units (51.5%) at a median price of $2,276 psf.
“Singaporeans’ dream of owning and living in a private home remains very much intact and this is reflected in the strong demand for the first EC project launch of 2021, Parc Central Residences, which sold 59.6% of its units at launch. ECs, being more affordably priced than private condos, appeal to many HDB upgraders,” says Gafoor.
He adds that the upswing in developer sales is not a reflection of surging demand. “What we have observed is that location, attractive product attributes, and right pricing are the key factors in driving good take-up rates. We believe most buyers are discerning and are entering the market to buy properties after they have carefully considered their options and finances,” says Gafoor.
However, Christine Sun, senior vice president of research & analytics at OrangeTee&Tie, says that concerns over new property cooling measures “nudged on-the-fence buyers to take action as their buying eligibility or borrowing limits could be affected”.
She adds that some long-term investors could have sprung into action as they anticipated that the new measures — if implemented — could make it harder to own a second or third property.
According to Nicholas Mak, head of research & consultancy at ERA Realty, the supply of private housing in the market has outpaced buying demand in recent months, with the monthly take-up rate of launched units remaining below parity from November 2020 to January 2021.
“As a result, the number of private housing units launched and unsold had grown steadily from a trough of 4,833 units in July 2020 to 7,226 units last month. The slower absorption rate indicates that the local private residential property market is not overheated,” says Mak.
Mak adds that if new property cooling measures are implemented this year, they could result in a glut of private and EC units.
Song of Colliers expects a “sequential decline in sales” in February 2021 due to a lack of new launches and the Lunar New Year festivities, but she adds that “given the gradual roll-out of the vaccines and recovery of the global economy, momentum in the housing market remains positive”.
Upcoming launch-ready projects include the 558-unit Midtown Modern and 351-unit One Bernam in the CBD. Other prime district projects include the 230-unit Perfect Ten at Bukit Timah Road; the 138-unit Klimt Cairnhill; the 120-unit The Atelier; and the 90-unit Peak Residence. Outside the Core Central Region there is the 165-unit one-north Eden and one EC project — the 413-unit Provence Residence at Canberra Link.
Song expects a strong buying rally brought on by a projected economic recovery this year will partially offset the relatively fewer new launches. This could force buyers to dip into already-launched projects or migrate to the secondary market.
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