Home sales jumped to the highest in nine months in May, highlighting property market recovery in Singapore. According to data released by the Urban Redevelopment Authority (URA) on Monday, there was a deluge of new launches in May, which saw 1,121 private home sales. This is an increase of 53.1 per cent from April and 7.9 per cent from the same month last year.
Home sales for May was only bested by the sales in August last year which saw 1,246 new private homes being sold. The data from URA suggested that suburban projects were most popular with home buyers, with 834 units being launched and 792 homes sold.
In comparison, 56 units were launched in the Core Central Region and 43 were sold, while the Rest of Central Region saw 170 units launched, with 286 sold.
The local property market experienced a four-year slump after the Government introduced several cooling measures to curb the overheated real estate scene. URA reported that property prices rose 3.9 per cent in the first quarter of this year. This is the biggest gain in almost 8 years.
The home sales figures for the month of May was more than the revised 732 units sold in April, and is the highest since August 2017. Still, sales are running at a slower pace than early last year.
CBRE’s head of Research for Singapore and South East Asia, Desmond Sim, noted that “new private home sales (excluding ECs) for May (was) supported by sales from Twin Vew which accounted for 40% of sales (454 units).”
He added: “This brings the tally for new private homes sold year to date to 3,434 units, compared to 5,568 units in the first five months of 2017. This can be attributed to the fact that there were fewer major launches in the beginning of the year. We expect buying demand to be more selective on the back of more launches expected in the near term. Total price quantum will remain the key affordability consideration while unit prices ($/psf) are expected to rise steadily.”
1,060 new units were launched in May and this is a 60 per cent increase from April, and a staggering 186 per cent from May last year. Including Executive Condominiums (ECs), 1,257 units were sold in May. This total figure though is a drop from the 1,328 sold in the previous month and 1,416 homes sold in May last year.
ZACD Group executive director Nicholas Mak noted that the current buying momentum is healthy not only because developers managed to sell more units in May, but also because the number of units sold is greater than the number of units launched.
“There has been a gradual increase in the number of units launched by developers over the last few months … The good thing is that the market is still able to absorb the number of units launched,” Mr Mak said.
Observers said that the home sales figures will be lower for the month of June because demand is seasonally weaker during the school holidays.
Key executive officer at ERA Realty Network, Mr Eugene Lim, said that buying demand is expected to increase again after June “as several major developments are set to be launched.”
A recent report by List Sotheby’s International Realty Singapore said that a large private homes supply will hit the property market soon. The report suggested that with the expected launch of 29 developments from this quarter to the end of 2018, as many as 14,200 private homes may come into the property market. The property agency said that if the developers launch their projects strategically, the market should be able to digest the large volume of private residential units which will come to the market this year.
Sotheby’s reviewed the recent government land sales (GLS) sites as well as those from successful collective sales to arrive at their inference about the large private homes supply. The firm made the assumption of a period of nine to 12 months for the GLS sites to obtain all planning approvals before being launched for sale, and 15 to 18 months for the collective sale sites.
Based on these assumptions, the firm has identified 29 sites acquired by developers between mid-2016 and August last year that could be launched later this year.
These new projects can result in a large private homes supply of an estimated 14,200 units being launched. Six of these sites are in the core central region, which are areas such as Orchard Road, 13 are in the rest of the central region that includes areas like Tanjong Rhu, and 10 are in the outside central region, which refers to the suburbs.
While these volumes of large private homes supply may seem high, they are not unprecedented said Sotheby’s. Based on URA’s statistics, developers launched an average of 15,400 units a year from the years 2009 to 2011.
Sotheby’s, in pointing out this statistics following the sub-prime crisis in 2008, said inventory under construction (launched and unsold, and unlaunched projects with planning approvals) held by developers was around 35,000 units. The unsold inventory as reduced to 18,900 units by end-2017 when demand picked up lat year.
Sotheby’s associate director for research Han Huan Mei said that “for developers to launch around 15,000 units (in) the remaining part of this year may be possible for the market”. With the market still on a recovery track, this level may not be too much for it to digest. Also, developers have sold many of the units from existing projects.”
She added: “developers will also likely pace their launches, depending on their business strategies”.
The report noted that developers have already built up a substantial land bank in the past two years and with land prices on the rise, they may become more selective with bidding for en bloc sales.
Sotheby’s believes that demand for the large number of private home sales will be driven by liquidity, low interest rates, as well as interests from those who sold in this latest round of collective sales. The property agency believes that the property cooling measures will cap demand and prevent overheating in the large private homes supply.
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