29.7% m-o-m fall in May new home sales a ‘temporary setback’

/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - In the month of May, developers launched 514 units for sale and sold 891 units. Although the figure is 29.7% lower compared to the 1,268 units sold in April, it is 83% higher on a y-o-y basis. The drop in sales is unsurprising as Singapore went into Phase Two (Heightened Alert) on May 16. (See also: One Bernam sells 23% of total units at launch)
“The 50% drop in launches and 30% drop in new private home sales in May is only a temporary setback,” says Ong Teck Hui, senior director of research & consultancy at JLL. “Fundamentals have not changed as buyers are still positive about the market and developers plan to release more units for sale to capitalise on the healthy demand.”
In fact, sales volume was much better compared to the “circuit breaker” in April 2020 when it plunged by almost 60%, says Lee Sze Teck, director of research at Huttons Asia.
If executive condominiums (EC) were included, new home sales in May decreased by 8.8% m-o-m to 1,230 units, notes Christine Sun, head of research for OrangeTee & Tie.
The Phase Two tightening of safety measures had a weaker negative impact on the private residential property sales,” agrees Nicholas Mak, ERA Realty head of research & consultancy.
This is borne out by the difference in private new home sales before and after the Heightened Alert (see table below). Huttons Asia’s Lee split sales based on caveats lodged according to the period from May 1 to 15 (prior to Heightened Alert) and from May 16 to 31 (after Heightened Alert). The breakdown in sales between the first half and second half of May was 55% to 47% respectively. Even after adjusting for the launch of One Bernam and Park Nova in May, the split in new home sales between the first and second half of the month was 51.2% and 48.8% respectively. “We believe sales in May would have been much higher if there were no restrictions on showflat viewings,” Lee adds.
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“Many developers and sales agents were able to switch to remote viewings quickly,” OrangeTee’s Sun says. “Buyers were also getting more accustomed to the use of the virtual and augmented reality that has digitalised the home buying experience and made online searches more seamless and accessible.”
More private new homes in the suburbs (Outside Central Region, OCR) and city fringe (Rest of Central Region, RCR) were sold last month, notes OrangeTee’s Sun (see breakdown by market segment). The proportion of lower quantum units (excluding ECs) below $1.5 million rose from 41.1% in April to 46.4% in May 2021, according to URA Realis data.

CCR notable deals

For the month of May, Park Nova saw 12 units sold between $6.8 million ($4,742 psf) and $34,4 million ($5,838 psf) [Picture: Shun Tak Holdings]
Sales in the Core Central Region (CCR) in May was 24.4% lower compared to April, after adjusting for new launches, says Huttons’ Lee.
However, the proportion of new homes sold for at least $3 million rose steadily from 5.5% in March to 6.6% in April and 7.7% in May, according to OrangeTee’s Sun.
Last month, 10 condominium units were transacted at prices above $10 million apiece. Of the 10, nine were units at Shun Tak Holdings’ 54-unit Park Nova at Orchard Boulevard-Tomlinson area in District 10 and one was from the 56-unit Meyerhouse on Meyer Road in District 15, by Kheng Leong and UOL Group. It marketd the highest number of such big-ticket transactions since March, says OrangeTee’s Sun, when 10 units in this price bracket were sold too.
For the month of May, Park Nova saw 12 units sold between $6.8 million ($4,742 psf) and $34,4 million ($5,838 psf). The $34.4 million was for the biggest penthouse of 5,899 sq ft. The buyer is believed to be an ultra-high net worth individual (UHNWI) from China who is already a resident in Singapore. The $5,838 psf has also surpassed the $5,125 psf achieved for the biggest penthouse of 6,038 sq ft at Boulevard 88 in June 2019. The buyer of the penthouse at Boulevard 88 is also believed to be a Chinese national.
“The appeal of Singapore as one of the best places to be during this pandemic are attracting UHNWIs to move here,” says Mark Yip, CEO of Huttons Asia. “There may be more purchases by UHNWIs once the borders are opened.”
The penthouse at Park Nova is also the third-highest on a psf basis for a new condominium, notes Sun of OrangeTee. At $5,838 psf, it is ranked just below two units at The Marq on Paterson Hill that were sold for $6,650 psf and $6,215 psf in 2011 (see table). These units were also purchased by Chinese buyers.
Source: OrangeTee & Tie Research, URA Realis

‘Buying interest still keen’

Provence Residence - EDGEPROP SINGAPORE
Provence Residence - top-selling EC project for the month of May, having sold 229 units out of a total of 413 units (55.4%) last month (Photo: Samuel Isaac Chua/EdgeProp Singapore)
No new launches have been slated for launch in the month of June as Singapore emerges cautiously from Phase Two and enter Phase Three (Heightened Alert) from June 14. “We expect sales could be muted in June, largely due to the absence of major launches,” says Ismail Gafoor, CEO of PropNex. “We anticipate that new home sales should rebound from July, where we will potentially see more projects being launched.”
The month of July, however, is expected to be busy with several new launches lined up: the 455-unit The Watergardens at Canberra by UOL Group and Kheng Leong, the 496-unit Parc Greenwich executive condo (EC) at Fernvale by Frasers Property and Allgreen Properties’ 487-unit Pasir Ris 8 in the OCR; as well as the 138-unit Klimt Cairnhill (redevelopment of the former Cairnhill Mansions) by Low Keng Huat and the 230-unit Perfect Ten (redevelopment of the former City Towers) at Bukit Timah by CK Asset Holdings in the CCR.
“We can expect a favourable response to most of these projects, especially those in the OCR where there are signs of pent-up demand for more affordably-priced mass market units from owner-occupiers, including HDB upgraders,” says Gafoor. “Based on our observations, consumer confidence is intact and home buying interest is still keen.”
Watergardens at Canberra could probably be the most attractively priced project in the OCR in 2021 — “before repricing takes place in 2022”, notes Huttons’ Yip. He sees Klimt at Cairnhill likely “to ride the positive buying momentum in the CCR for the past five months”. Pasir Ris 8, an integrated development in the east, is “likely to see robust demand from buyers towards such projects in recent years. Meanwhile, Parc Greenwich will be the first EC launch in the Fernvale area in eight years and pent-up demand is likely to drive sales, he adds.

Top selling projects (including ECs) for the month of May

Source: OrangeTee & Tie Research, URA Realis

‘Two-way street’

Leonard Tay, Knight Frank Singapore’s head of research, sees current demand for private homes taking the form of “a two-way street”. The first dynamic comprises HDB upgraders whose homes have fairly recently passed the five-year Minimum Occupation Period (MOP). “They are looking to cash in at a time when HDB prices have built up considerable upward momentum since 3Q2020 (when Singapore exited the circuit breaker),” he says. “The proceeds and profits from the sale of these HDB flats have enabled many families to make that transition into the private residential market, especially young professional couples who have benefitted from general wage increases in the past decade.” (See: Find HDB flats for rent or sale with our Singapore HDB directory)
The second movement involves “downgraders”, typically retirees whose children have grown up and left home to start families of their own. “Retiree couples, including some of those that benefited from the collective sale boom of 2017/2018, are also choosing to cash in on healthy prices in exchange for a smaller home that is more easy to maintain, and are in turn, willing to offer some premium (on a psf basis),” says Tay. “In a society with a growing ageing population, the volume created by these downgraders can be substantial.”
Total new home sales for the first five months of 2021 stands at 5,652 to date, says Tay. “There is every likelihood that sales volumes would bounce back to pre-Phase Two (Heightened Alert) levels due to some pent-up and genuine demand from homebuyers,” he notes. “Therefore, the primary sales volume for 2021 remains firmly on track to reach the 10,000 mark by year end.”
PropNex is more optimistic and is projecting that private new home sales (excluding ECs) could cross 10,000 units, “barring any unforeseen events and new cooling measures”, says Gafoor.

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