MENU

New residential property sales outperformed expectations in February

by • March 18, 2020 • Research and AnalysisComments (0)76

Despite the out-performance of new residential property sales, new home sales expected to fall in first half of 2020

Data released by the Urban Redevelopment Authority on Monday (16 March) showed that 975 new private homes (excluding Executive Condos) were sold in February, up by 57.3% from the 620 units that were shifted in January 2020. On a year-on-year basis, developers’ sales more than doubled from the 455 units (excl. ECs) transacted in February 2019.

Commenting on the new residential property sales, CBRE said: “despite the onset of the COVID-19 outbreak, the month of Feb 2020 outperformed expectations, raking in a total of 975 units (excluding ECs). This exceeded the take-up of 620 units in Jan 2020 and 455 units in Feb 2019.”

CBRE noted that the bulk of new residential property sales volume was contributed by The M, which was a new launch in Feb 2020.

Mr Desmond Sim, CBRE’ Head of Research for Southeast Asia said: “With 380 units sold, it made up about 39.0% of all new sales volume. It should be noted that price quantum continued to be an encouraging motivator, as 97.9% of all sales in The M are below $2 mil. This is as The M is not shackled by the minimum average size of 85 sqm as they fall in the CCR region.

“Previously launched projects also contributed to the overall sales numbers with Treasure at Tampines (97 units), Parc Esta (53 units), Jadescape (46 units) and Parc Botannia (40 units). Market weakness has yet to set in as median price psf for these projects are still holding strong.

In the EC segment, Parc Canberra was the only new launch in Feb 2020 and it registered a stellar performance with 320 units sold. Moving forward, sales volume for the EC market is expected to continue as projects such as OLA will be available for sale.”

Year-to-date 2020 figures totaled at 1,595 units. CBRE Research expects new residential property sales to fall within the range of 7,000 to 8,000 units, which remains the underlying demand of the market, despite a challenging H1 2020. Most launches are expected to go on as scheduled in 2020 as majority of developers have already secured a Temporary Occupation License site for their new residential property sales projects.

Overall, affordability in terms of overall quantum continues to be the driver for new residential property sales.

Mr Sim added: “Buyers out there continues to be more discerning where location and developer’s reputation will swing their choices. The lower interest rate also seems to be another catalyst for buying momentum; however, affordability remains key for both EC and non EC markets.”

Colliers International commenting on the new residential property sales said new launches dominated developers’ sale in February 2020. Transactions surged, thanks to the new project – The M in Middle Road – which accounted for over a third of the sales last month.

Colliers noted that in recent weeks, the COVID-19 outbreak has further heaped uncertainty on the global economy and that while it remains cautiously optimistic about home sales, much would depend on the economic fallout from the outbreak and whether there are large-scale job losses – widespread retrenchments, should it happen, will certainly dampen housing demand.

“The best-selling private residential projects in February were: The M which sold 380 units at a median price of SGD2,439 psf; Treasure at Tampines which moved 97 units at a median price of SGD1,379 psf; and Parc Esta which transacted 53 units at a median price of SGD1,686 psf.

new residential property salesMeanwhile, the top selling EC project was the newly launched Parc Canberra which shifted 324 units at a median price of SGD1,111 psf. In February, developers sold 339 ECs – which are a hybrid of public and private housing – taking the total new home sales to 1,314 units during the month. 79% of the units sold at Parc Canberra ECs are priced below SGD1.2 million, hitting the sweet spot for first-timers or HDB upgraders.”

Ms Tricia Song, Colliers International’s Head of Research for Singapore commenting on the developers’ sale said: “In assessing February’s data, we note that the brisk sales were driven largely by new launches, and selected projects that are competitively priced to attract value-conscious buyers.”

“Despite the raising of the COVID-19 outbreak alert level to Orange since 7 February, buyers reportedly braved the hot sun and social distancing measures to queue up for units at The M, as the project was seen to be at bargain pricing for a residential property in the city centre. The M is located in a vibrant central business district enclave, with rental catchment and abundant amenities including an MRT interchange nearby. The efficient layout and smaller format of units also make for affordable investment and owner-occupier purchases. Despite a median price of SGD2,439 psf, 76% of The M units that were sold in February were priced below SGD1.5 million.

Based on Realis data as of 16 March, around 55% of the developer sales (excluding ECs) in February 2020 were projects with units priced between SGD1 million and SGD1.5 million. We estimate 55% of the total developer sales in February 2020 were priced at the median price of SGD1,000-2,000 psf.”

Mr Paul Ho, chief mortgage officer at iCompareLoan, commenting on the new residential property sales said, “the first half of 2020 will be challenging for all businesses in Singapore. But still there are some bright sparks in the economy. As interest rates have fallen from the highs of last year, now may be the best time to get the best home loan you have always been looking for. It is also a good time to refinance.”

The recent rate cuts by the US Federal Reserve means that interest rates would remain lower for longer, and would be supportive of housing demand. Mortgage rates based on SIBOR have come off 30-40bps since the first 50bps rate cut by Fed, and should come off further.

Colliers warned, “rate cuts and Quantitative Easing are no magic bullets should the global and Singapore economy descend into a recession. Unemployment rate could then rise, and we should expect demand and prices for residential property to decline.”

Pin It

Related Posts

Simple Share Buttons