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April new home sales shows homebuyers will be more cautious going forward

by • May 18, 2020 • URA StatisticsComments (0)84

April new home sales were down by 58.0% from the 660 units that were shifted in March 2020

Data released by the Urban Redevelopment Authority of Singapore (URA) on Friday (15 May) showed that 277 new private homes, excluding Executive Condominiums (ECs) were sold in April. April new home sales were down by 58.0% from the 660 units that were shifted in March 2020. On a year-on-year (YOY) basis, developers’ sales declined 62.4% from the 737 units (excl. ECs) transacted in April 2019.

April new home salesThis brings April new home sales (excluding ECs) to 2,426 units in year-to-April, 5.8% lower than the 2,575 units in year-to-April 2019.

In April, developers sold 16 ECs – which are a hybrid of public and private housing – down from the 244 ECs sold in March during which Ola EC was launched. This brings total April new home sales to 293 units, down 67.6% month-on-month (MOM) and 60.7% YOY.

Commenting on the April new home sales, Mr Desmond Sim, CBRE’s Head of Research for Southeast Asia, said: “A total of 277 new homes (excluding ECs) were sold in April 2020, representing a fall of 58.0 % m-o-m and 62.4 % y-o-y. About 65% of new home sales in April 2020 were transacted before 7 April when “circuit breaker” period commenced.”

CBRE added:

  • The planned pipeline for new launches was originally higher but developers have shifted their launches, possibly launching after the “circuit breaker” when it ends till 1 June 2020. Only one significant project,15 Holland Hill, was newly launched in April 2020.  Majority of units launched and sold came from prior project launches.
  • Demand largely came from CCR with KOPAR at Newton as the top performer in April with 83 units sold at a median price of $2,241 psf. Jadescape (12 units) and Treasure at Tampines (28 units) continued to be top performers in OCR and RCR, though their sales rates has declined significantly by about 60% – 80%.  That said, transaction prices for these projects are still holding up.
  • To date, new home sales figures till April 2020 totaled at 2,426 units, representing only a minimal decline of 5.8% y-o-y as it was supported by the relatively robust sales figures in Q1 2020. Judging by today’s number, it seems that sales will move for developments that represents value especially in good locations. The real challenge for May will be the extended “circuit breaker” period.
  • While virtual show flats has been an interim solution to attract homebuyers during this “circuit breaker” period, homebuyers are expected to adopt a more cautionary stance, and to be more certain to make a decision when show suites are reopened. We will expect to see a trickle of sales come through as decision making will be slower. Sales will be from prior project launches where there will be no ambiguity of a virtual showflat.
  • Overall, disruptions from the extended “circuit breaker”, where sales galleries are mandated to close, the ban on foreign visitors into Singapore and the slowdown in project launches, are expected to have a negative impact on sales volume moving forward. CBRE Research maintains that new home sales volume forecast is expected to fall between 4,000 and 5,000 units (excluding ECs) for the whole of 2020.

Tricia Song, Head of Research for Singapore at Colliers International noted that developer sales hurt after the kick-off of the circuit breaker measures on 7 April, as physical viewings at showflats have to be halted. As a result, sales fell further from an already-low base in March.

Colliers International noted that despite the developers sale hurt, the best-selling private residential projects in April were: Kopar at Newton which sold 83 units at a median price of S$2,241 psf; Treasure at Tampines which moved 28 units at a median price of S$1,372 psf; and Riverfront Residences which transacted 17 units at a median price of S$1,208 psf.

There were two new launches in April – one of them is a landed development with just five units – Burghley Drive in the Serangoon area; and the other one is 15 Holland Hill (former Olina Lodge). Both sold one unit.

Ms Song analysing the developer sales hurt and the path forward said:

“The circuit breaker did not deter some buyers — over one-third of the developer sales in April were transacted on or after 7 April, reflecting resilient demand. Some transactions continued to happen even after the circuit breaker kicked in, as buyers could have seen the showflats before the circuit breaker and made the decision after.

Excluding ECs, new launches made up only 0.7% of developers’ sales in April 2020, versus 2% in March. 30% of the private home sales in April were from Kopar at Newton whose launch was brought forward after the circuit breaker measures were announced. Otherwise, sales were dominated by earlier launched projects in the city fringe and suburbs priced which have lower price quantum of S$1.2 – 1.5 million.

Buyers are generally still price sensitive — we estimate 58% of the total developer sales in April 2020 were priced at the median price of S$1,000 – 2,000 psf. “

Mr Paul Ho, chief mortgage officer at iCompareLoan.com, said: “it is understandable why developer sales hurt in April. The pain could be deeper in May. But the various government relief schemes would mitigate some of the effects of the Covid-19 crisis.”

He added, “despite this developer sales hut in the next two months, it is unlikely that the demand for residential properties would be drastically affected. The interest rates for housing loans are its lowest levels in months and people will still need to buy and sell their homes. But this is not enough to sustain the momentum in the housing market. We still need the investors to come in in larger numbers and this can only happen after the circuit breaker period.”

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