New home sales jump 13.1% m-o-m, still premature for more cooling measures

/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - According to the latest statistics by the URA, developers sold 1,270 new private residential units (excluding executive condos) in the month of September, increasing 13.1% m-o-m compared to the 1,123 units sold in August.
It is the third consecutive month that new private home sales have surpassed 1,000 units sold. Last month’s sales figures are also the highest so far this year, and they are the highest September sales numbers on record since 2012 when developers sold 2,621 units.
“However, demand is diluted across multiple launches and competition for buyers remains keen. Developers have to be strategic about pricing and offer buyers incentives or increase agent commissions,” says Wong Xian Yang, senior manager of research, Singapore and Southeast Asia, at Cushman & Wakefield.
Avenue South Residences led the pack after launching on Sept 7, and the 1,074-unit development sold 361 units at a median price of $1,941 psf, accounting for 28.4% of all new home sales during the month. The other top selling projects were Parc Clematis which sold 119 units at $1,620 psf, and Parc Botannia which sold 71 units at $1,311 psf.
The number of purchases by locals rose 29.3% to 1,078 units sold in September compared to 834 units in August. This is the highest number of new homes purchased by Singaporeans since July last year when they bought 1,250 units, according to URA caveats.
“September’s sales performance has exceeded market expectations given the backdrop of continued global uncertainty and ongoing trade tensions. The strong local support indicates that many Singaporeans remain confident about the long-term prospects of private properties here,” says Christine Sun, heads of research and consultancy at Orange Tee & Tie.
But despite strong sales and the URA flash estimates increasing in 3Q2019, it is premature for the authorities to implement more cooling measures because the signs do not show the market over-heating, says Nicholas Mak, head of research and consultancy at ERA Realty.
He notes that it is “very typical” for higher sales in the primary market to correlate positively with higher launch volumes. While the private residential property price index also grew 0.9% q-o-q in 3Q2019, the rate of growth is decelerating, he says.
Lastly, there is a large supply of unsold units in launched and launch-ready residential projects, and the market needs time to digest this supply. “Any additional market curbs would reduce buying demand, resulting in a glut that would drag down not only the property market, but the banking sector as well,” he says.
This was already exhibited in September when the sales-to-launch take-up rate slipped to 74.1%, which is weaker than the three-months from June to August, when the take-up rate ranged from 110% to 130% per month.
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