Pent up private property demand fizzled in October as caution sets in

After a five-month growing streak, developer sales corrected sharply in October as pent up private property demand fizzled and caution set in following the clampdown on the re-issuing of options to purchase (OTPs) by developers on 28 September. There was also a lack of new launches.

The fizzling of the pent up private property demand was observed in the data released by the Urban Redevelopment Authority of Singapore (URA) on Monday, 16 November.

It showed that 642 new private homes excluding Executive Condos (ECs) were sold in October, down by 51.7% month-on-month (MOM) from the 1,329 units that were shifted in September 2020. On a year-on-year (YOY) basis, developers’ sales also fell 31.1% from the 932 units (excl. ECs) transacted in October 2019.

With the fizzling of the pent up private property demand, private home sales (excluding ECs) year-to-October to 8,021 units, fell 4.5% below the 8,401 units sold in the first 10 months last year.

In October, developers sold 40 ECs – which are a hybrid of public and private housing – 28.6% fewer than the 56 ECs sold in September, and 48.1% more than the 27 ECs sold in October 2019. This brings total developer sales (including ECs) in October 2020 to 682 units, down 50.8% MOM and 28.9% YOY.

Top 10 Selling Projects in October 2020 (including EC)

Source: Colliers International, URA – * CCR: Core Central Region; RCR: Rest of Central Region; OCR: Outside Central Region 

The best-selling private residential projects in October were mostly earlier launches, with some laggards on buyers’ radar now that the more popular projects are substantially sold or have raised their prices.

The top-selling projects in October are:

• The Garden Residences which moved 53 units at a median price of S$1,612 psf;
• Treasure at Tampines which sold 50 units at a median price of S$1,408 psf; and
• Parc Clematis which sold 49 units at a median price of S$1,644 psf.

New Launch in October 2020

Source: Colliers International, URA – * CCR: Core Central Region; RCR: Rest of Central Region; OCR: Outside Central Region 

There was only one new project launch in October – high-end Hyll on Holland which sold five units or 8% of the 60 units launched. The lower sell-through rate would be due to the higher price point – at the median price of S$2,729 psf, its best-selling two-bedroom units cost between S$1.7 to 1.9 million each.

Commenting on the fizzling of the pent up private property demand in October, Ms Tricia Song, Head of Research for Singapore at Colliers International, said: “The sharp slowdown in developer sales could be due to a wait-and-see reaction on the ground, as buyers take stock of the situation following the clampdown on the reissuance of OTP.”

“We expect the projects most affected by the tightened rules are likely those targeted at HDB upgraders – these buyers must now sell their flat first, and then rent a home while waiting for their new homes to be ready. In fact, 72% of the total developer sales in October 2020 were priced at the median price of S$1,000-2,000 psf, compared to 88% in September 2020, showing a decreased proportion of HDB upgraders.

In October, take-up was almost split between the OCR and RCR. The OCR or the proxy for the mass market segment makes up 45.5% of total sales (excl. ECs), compared to 29.0% in September 2020. The RCR made up 44.1% (excl. ECs), compared to 64.6% in September 2020. The proportion of CCR or a proxy for the high-end segment remained stable at 10.4%, compared to 6.2% in September.

Momentum in the high-end segment appeared to have been sustained. Leedon Green sold nine units at a median price of S$2,581 psf, after moving just one unit in September. The Avenir moved another three units at a median price of S$3,062 psf, after moving eight units in September. The priciest unit on a per square foot price came from one unit at Boulevard 88 at S$3,733 psf.

On 2 November, the Ministry of National Development issued a written answer to a Parliament question on this issue. It was disclosed that since January 2019, 5,500 private housing transactions had OTPs for the same units re-issued to the same purchasers. Close to 70% of these re-issued OTPs have been exercised, on average less than 6 months from the date the first OTP was issued. Only about 1% of the re-issued OTPs eventually lapsed.”

Colliers International noted that based on caveats downloaded on 16 November, 157 new private homes (excluding ECs) were sold in the first eight days of October, reflecting a similar pace as October. it added that things could pick up towards the end of November.

“The Linq@Beauty World has reportedly sold almost all its 120 units in its launch weekend of 14-15 November at an average price of S$2,150-2,200 psf. The Landmark near the CBD consisting of 396 units, has drawn 1,200 visitors at its physical showflat over the most recent weekend and is expected to launch on the weekend of November 28-29.

Other upcoming major projects in the pipeline include 640-unit Clavon at Clementi Avenue 1, 660-unit KI Residences at Brookvale, and 230-unit Perfect Ten at Bukit Timah Road. We expect 2020 developer sales to fall about 10% to 8,900 units from the 9,912 units in 2019.

Final estimates from URA showed that private residential property prices grew at an increasing rate, by 0.8% QOQ in Q3 2020, after rising 0.3% in Q2. With the resilience of the sales and price index up 0.1% year to date at this point, we now expect prices could be flat in 2020.”