Private new home sales took a hit in June as new projects were being launched at new benchmark prices, according to Christine Sun, head of research and consultancy at OrangeTee & Tie.
The developers’ sales survey by the URA for June showed that developers sold 42% less private homes (654 units excluding executive condominiums or ECs) on a month-on-month (m-o-m) basis and 20.2% less on a year-on-year (y-o-y) basis. Including ECs, sales dipped 44% m-o-m and 34% y-o-y to 706 units. This brings 1H2018 developer sales to 4,090 units (excluding ECs), about 32.3% lower compared to 6,039 units sold over the corresponding period in 2017.
In June this year, 726 units were launched, the highest number of units launched in the month of June since 2013, which saw 1,768 units excluding ECs launched.
Following the fresh cooling measures implemented on July 6, Tricia Song, head of research for Singapore at Colliers International expects sales momentum to become more sluggish as the higher additional buyer’s stamp duty may discourage some investors from entering the market. Meanwhile, the lowered loan-to-value ratio to 75% will likely impact marginal first-timer buyers’ ability to purchase homes. They may defer the purchase decision as more time is needed to raise the additional capital outlay required to make the down payment for the purchase, adds Song.
Sale of new launches
The top five private residential projects for June 2018 are Margaret Ville, Affinity at Serangoon, Twin Vew, The Garden Residences and 120 Grange.
Margaret Ville sold 121 units at a median price of $1,873 psf; Affinity at Serangoon shifted 107 units at a median price of $1,584 psf; The Garden Residences transacted 64 units at a median price of $1,662 psf; and the previously launched Twin Vew recorded 64 transactions at a median price of $1,350 psf. Finally, 120 Grange saw 42 units transacted at a median price of $3,159 psf.
The two neighbouring and competing projects, Affinity at Serangoon and The Garden Residences , saw relatively weaker take-up rates, at 10% of their respective total available units, possibly due to their benchmark pricing of over $1,500 psf in the Serangoon North enclave, notes Colliers’ Song.
Adds OrangeTee & Tie’s Sun: “Sales for both projects could have been stronger if their launches were better spaced. Both projects were essentially targeting the same pool of buyers and were cannibalising each other’s market share by launching the projects together.”
According to the URA, in the EC segment, inventory continued to dwindle. Developers sold 52 new EC units in June – down from 137 in May – with Rivercove Residences in Anchorvale Lane accounting for more than half of the sales at 29 units which were transacted at a median price of $1,000 psf, a record high for new ECs. Just two months into its launch in April, the 628-unit project is now almost fully sold, with only one unit still available as at end-June 2018.
In the second half of 2018, new home sales are now dependent on launches, some of which may be delayed or reduced due to developers being cautious of the uncertain market, notes Ong Teck Hui, national director of research and consultancy at JLL. As such, new home sales for 2018 are now estimated at 8,000 to 9,000 units or 15 to 25% lower than in 2017.
Home prices are likely to hold steady from this point, after rising by 7.4% in the first six months of this year, notes Colliers. For already launched projects, they are unlikely to show a downward trend in actual transacted prices, while for those that have yet to be launched, developers are likely to trim their average selling prices from their original intended aggressive pricing to current achieved levels.
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