Popular new launches in September push developer sales up 125% m-o-m

/ EdgeProp Singapore |
The strong sales at Lentor Modern (pictured) and Sky Eden@Bedok reflected the demand and desire from buyers for a private home. This is the second-highest monthly developer sales so far this year after 1,355 units were sold in May. (Picture: Samuel Isaac Chua/The Edge Singapore)
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EDGEPROP (SINGAPORE) - According to the latest developer sales data by URA, 913 new private residential units were launched in September 2022, compared to 987 new condominium units that were sold during the month. Last month’s developer sales figure is up by 125.3% m-o-m and up by 18.3% y-o-y.
The latest sales performance comes amid fast-rising mortgage rates and a souring global macroeconomic backdrop. Yet, this is the second-highest monthly developer sales so far this year after 1,355 units were sold in May. Developer sales during that month benefitted from pent-up demand and the launch of Liv@MB and Piccadilly Grand.
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A graph showing the quarterly new private residential transactions from 3Q2017 to 3Q2022, using EdgeProp's Market Trends Property Tool. (Source: URA, EdgeProp)

Propelled by new launches

Most of the new home sales last month were generated by the launch of two new projects — the 605-unit Lentor Modern on Sept 17 and the 158-unit Sky Eden@Bedok on Sept 7.
Frasers Property, the developer of Sky Eden@Bedok, sold about 75% of the project, while GuocoLand, the developer of Lentor Modern, moved about 84% of its project. These two projects accounted for about 64% of September’s new home sales.
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“About 25% of the sales at Lentor Modern and Sky Eden@Bedok are below $1.5 million, meanwhile 45.7% of sales are in the range of $1.5 million to $2 million, and the remaining 29.4% above $2 million. The $1.5 million to $2 million range appears to be the sweet-spot pricing for homes in the OCR [Outside Central Region] moving forward,” says Lee Sze Teck, senior director (research) at Hutton Asia.
Developer sales in September 2022 were propelled by strong sales at new launches
Christine Sun, senior vice-president of research at OrangeTee&Tie, noted that the sales performance of both projects was “astounding'' given their price points, interest-rate hikes and growing uncertainties on the macroeconomic front. The median launch price for both developments was above $2,100 psf.
“Demand remains strong due to a lack of home supply in the suburbs and HDB upgraders who have sold their flats in recent months and still need a replacement home,” says Sun.

Sales momentum in the CCR

SkyEden@Bedok and Lentor Modern are in the OCR, which saw a total of 686 units (69.5%) sold last month. The Rest of Central Region (RCR) recorded sales of 103 units (10.4%), and the Core Central Region (CCR) saw 198 units sold (20.1%).
Other top-selling projects last month were Leedon Green, Pullman Residences Newton, Perfect Ten, Hyll on Holland, and Riviere. All these projects are in the CCR.
According to Leonard Tay, head of research, Knight Frank Singapore: “There has been steady traction of transactional activity of prime homes since borders reopened from April 2022, bearing in mind that the median psf prices of units in the CCR are higher than those in the OCR and characteristically have a more limited pool of buyers with the financial purchasing power to acquire such homes.”
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Lee says: “Buying interest in the CCR has stayed strong. The impact of cooling measures and interest rate is not expected to affect demand and prices for homes in the CCR. There is ample liquidity in the market and usually buyers of homes in the CCR have the wherewithal to make up for the shortfall in loan amount.”

Tempered 4Q2022 ahead

Looking ahead, the pipeline supply of new project launches is relatively slim. Two of the largest upcoming developments are executive condos (ECs) — the 639-unit Copen Grand in Tengah and the 618-unit Tenet in Tampines.
“Given the limited number of private condo launches, we expect new home sales (excluding ECs) to return to a muted level in October after September’s upswing, while the EC segment will see a pick-up in activity,” says Wong Siew Ying, head of research and content at PropNex Realty.
She adds that EC buyers can opt for the deferred payment scheme and may be eligible for CPF housing grants of up to $30,000. Upgraders moving up from a HDB flat to an EC also need not pay the additional buyer’s stamp duty upfront. “We think these factors will increase the appeal of EC units among would-be buyers,” says Wong. (Find HDB flats for rent or sale with our Singapore HDB directory)
"We have already witnessed a strong interest in Copen Grand EC based on the number of visitors to the show flat, with would-be buyers likely attracted its location near to the Jurong Lake District and within the upcoming green and smart Tengah estate," says Wong. (Picture: CDL-MCL Land)
Sun believes that the property cooling measures that came into effect on Sept 30 will have a “moderate” impact on the private residential market. “While the change will reduce the loan quantum available to home buyers, there could be a moderate impact on the private residential market. The revision was widely expected, and many borrowers were already exercising prudence as they knew that interest rates may continue to rise next year,” she says.
In 4Q2022, a seasonal year-end lull and lack of large suburban launches to look forward to would “exert a strong impact on the private housing market in the fourth quarter”, says Nicolas Mak, head of research and consultancy at ERA Realty Network.
“This is because the effects of the latest round of government intervention would be felt more in the HDB housing market. It would take a few months for the effects to spread to the private housing market,” says Mak. (Find HDB flats for rent or sale with our Singapore HDB directory)

Weaker consumer sentiment in 2023

So far, the first nine months of this year have recorded more than 6,480 new private home sales (excluding ECs). This is about 35% lower compared to the same period last year. “We anticipate that new private home sales could likely come in at around 8,000 to 8,500 units for the whole of 2022, substantially lower than the banner year of sales at over 13,000 units in the previous year,” says Wong.
Yet, economic concerns are clouding market sentiment and expectations next year. “The mix of cooling measures just nine months apart, a possible recession in 2023, widespread inflation, and the manner in which private home prices have climbed in the last 2½ years will inevitably start to shift the sentiment of some home buyers into tentative territory as interest rates progressively rise from now and into 2023,” says Tay of Knight Frank.

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