Price Cuts Don’t Necessarily Leads To Soaring Sales For New Private Homes

 

The latest figures from Urban Redevelopment Authority (URA) showed new private home sales picking up in April following bleak numbers in March. In that month, only 535 units (inclusive of executive condominiums (ECs)), changed hands, and of the two projects launched – Ascent@456 and The Santorini – the combined sales figure was a dismal 12.16 per cent, or 76 out of 625 homes released.

By contrast, April moved a total of 793 units. Of these nearly half, or 335 units, were from two property launches in that month. Lakeville and The Sorrento made their debut then. MCL Land, the developer of the 696-unit Lakeville, introduced 230 units into the market and 210 were sold. On the other hand, all the units in The Sorrento were released for sales, and transactions were a brisk 125 homes out of 131.

Median price for Lakeville stood at $1,318 psf and $1,414 psf for The Sorrento. According to JLL national director Ong Teck Hui, the pricing is competitive relative to historical transactions in the area, and this gave a fillip to demand.

Market veterans attributed the recovering sale figures to reasonable pricing by developers of new launches and newly-released units from older launches that are priced at a discount to their initial launch prices.

Using figures from URA monthly new private residence reports, we examine the projects that are sold in April at lower prices to their launch prices.

Excluding the two new launches in April, we only study projects that were launched after the TDSR framework was implemented in June 2012 and / or projects that sold 10 or more units in April.

Table 1a: Projects Sold At A Discount in April 2014 & Their Prices

Project Name	Total Number of Units in Project	Cumulative Units Launched but Unsold	Units Sold In April	% Of Unsold Units In Entire Project	Median Price ($psf) in April	Price Range ($psf) in April	Launch Month	Median Price ($psf) in Launch Month	Price Range ($psf) in Launch Month	% Change in Median Price
Grandview Suites	52	7	4	13.46	1045	1033 – 1088	Oct-13	1301	1190 – 1523	(19.68)
Sky Habitat	509	18	130	3.54	1377	1273 -1622	Apr-12	1583	1435 – 1893	(13.01)
Vue 8 Residence	463	28	5	6.05	881	868-1042	Jul-13	1004	819 – 1204	(12.25)
Bartley Ridge	868	64	10	7.37	1171	1106 – 1244	Mar-13	1296	1031 – 1514	(9.65)
The Bently Residences @ Kovan	48	27	1	56.25	1351	1351 – 1351	Aug-13	1451	1410 – 1461	(6.89)
8 Farrer Suites	34	18	1	52.94	1600	1600 – 1600	Aug-13	1709	1506 – 1725	(6.38)
The Glades	726	71	15	9.78	1425	1210 – 1604	Sep-13	1518	1252 – 1785	(6.13)
Rivertrees Residences	495	48	9	9.70	1051	971 – 1218	Feb-14	1111	943 – 1276	(5.40)
Riverbank @ Fernvale	555	26	7	4.68	981	830 – 1103	Feb-14	1033	837 – 1250	(5.03)
The Venue Residences	266	14	7	5.26	1396	1281 – 1471	Oct-13	1457	1300 – 1563	(4.19)
Sea Horizon	495	106	2	21.41	797	787 – 807	Sep-13	818	713 – 933	(2.57)
Eight Riversuites	862	186	19	21.58	1313	1105 – 1472	May-12	1340	1056 – 1670	(2.01)
Goodwood Grand	73	9	3	12.33	2404	2366 – 2544	Oct-13	2449	2449 – 2449	(1.84)
The Creek @ Bukit	260	61	9	23.46	1610	1501 -1802	Nov-13	1637	1486 – 1882	(1.65)
28 Rc Suites	45	29	2	64.44	1681	1680 – 1682	Aug-13	1698	1482 – 1722	(1.00)
Skypark Residences	506	209	7	41.30	794	768 – 818	Nov-13	800	738 – 896	(0.75)
The Tembusu	337	62	5	18.40	1541	1197 – 1657	Aug-13	1547	1210 – 1704	(0.39)

Source: URA

Table 1b: Projects Sold At A Discount in April 2014

 

Project Name	Street	Region	Property Type
Grandview Suites	Geylang	RCR	Non-Landed
Sky Habitat	Bishan Street 15	RCR	Non-Landed
Vue 8 Residence	Pasir Ris Heights	OCR	Non-Landed
Bartley Ridge	Mount Vernon Road	RCR	Non-Landed
The Bently Residences @ Kovan	Kovan Road	OCR	Non-Landed
8 Farrer Suites	Sing Joo Walk	RCR	Non-Landed
The Glades	Bedok Rise	OCR	Non-Landed
Rivertrees Residences	Fernvale Close	OCR	Non-Landed
Riverbank @ Fernvale	Fernvale Close	OCR	Non-Landed
The Venue Residences	Tai Thong Crescent	RCR	Non-Landed
Sea Horizon	Pasir Ris Rise	OCR	EC
Eight Riversuites	Whampoa East	RCR	Strata-Landed / Non-Landed
Goodwood Grand	Balmoral Road	CCR	Strata-Landed / Non-Landed
The Creek @ Bukit	Toh Tuck Road	RCR	Non-Landed
28 Rc Suites	Race Course Lane	RCR	Non-Landed
Skypark Residences	Sembawang	OCR	EC
The Tembusu	Tampines Road	OCR	Non-Landed

Source: URA

From Table 1a, we note that for the nine projects with at least a five per cent drop in the median price ($ psf) for April from the initial median price at launch, only Sky Habitat at Bishan moved more than 50 per cent of its remaining unsold units. In fact a spectacular 130 units, or 87.8 per cent, were sold after median price ($ psf) dipped by 13.01 per cent.

However, none of the other projects replicated this remarkable sales figures. Even among those with median price($ psf) cuts of close to 10 per cent or more, the number of units that changed hands were not eye-popping.

Grandview Suites’ median price ($ psf) slided by a huge 19.68 per cent, but only four units out of 7 saw takers. This can be attributed to its sleazy location at Geylang.

But even homes in more respectable areas did not experience overwhelming demand after price cuts. Vue 8 Residence at Pasir Ris had a median price ($ psf) dive of 12.25 per cent but sold units were merely five. Similarly, Bartley Ridge with its favourable location at the city fringe and next to the Bartley MRT Station, only transacted 10 units from a pool of 74 units, despite a wide 9.65 per cent median price ($ psf) drop.

The stellar results for Sky Habitat then can be due to its highly popular location in Bishan, and the marketing for its re-launch, along with its revamped showflat.

This suggests that booming sales is not a foregone conclusion even with attractive price slashes – attesting to the highly cautious mood among buyers in this tightly regulated property market.

Separately, we look at some projects which median prices ($ psf) in April had rose from their initial launches. And yes, there are buyers notwithstanding, though few in numbers.

Sky Vue in Bishan witnessed a median price ($ psf) jump of 18.92 per cent, and its minimum price surged from $1,135 psf at its launch to $1,615 psf, but still two units found buyers.

Duo Residences – an iconic upscale mixed development in the prime Bugis area – likewise, saw a significant median price ($ psf) spike of 16.91 per cent, but nonetheless sold two units. Its minimum price also upped from $1,513 psf to $2,262 psf.

Prime homes will invariably find buyers even with premium prices in a weak market.

Table 2a: Projects Sold At A Hike in April 2014 & Their Prices

Project Name	Total Number of Units in Project	Cumulative Units Launched but Unsold	% Of Unsold Units In Entire Project	Units Sold In April	Median Price ($psf) in April	Price Range ($psf) in April	Launch Month	Median Price ($psf) in Launch Month	Price Range ($psf) in Launch Month	% Change in Median Price
Sky Vue	694	9	1.30	2	1666	1615 – 1717	Sep-13	1401	1135 -2031	18.92
Duo Residences	660	45	6.82	2	2337	2262 – 2412	Nov-13	1999	1513 – 2596	16.91
The Quinn	139	120	86.33	1	1624	1624 -1624	Jul-13	1530	1366 – 1592	6.14
Nine Residences	186	53	28.49	5	1170	1022 – 1249	Oct-13	1107	871 – 1284	5.69
La Fiesta	810	8	0.99	14	1216	972 – 1242	Jan-13	1163	956 – 1359	4.56
Lush Acres	380	0	0.00	1	823	823 – 823	Aug-13	790	673 -880	4.18
The Skywoods	420	342	81.43	8	1336	1216 -1353	Sep-13	1290	1119 – 1450	3.57
Q Bay Residences	630	5	0.79	12	1048	905 – 1106	Jan-13	1012	823 – 1277	3.56
Rv Residences	248	50	20.16	4	2114	2090 – 2135	Aug-13	2043	1893 -2091	3.48
Guillemard Suites	146	51	34.93	8	1407	1257 – 1696	Nov-13	1360	1146 – 1672	3.46
Liv On Wilkie	81	11	13.58	1	2592	2592 – 2592	Oct-13	2519	2350 – 2582	2.90
Ecopolitan	512	96	18.75	3	808	788 – 816	Aug-13	793	677 – 871	1.89
Rezi 3two	65	50	76.92	3	1541	1373 – 1548	Nov-13	1519	1374 – 1594	1.45
The Santorini	597	500	83.75	23	1124	867 – 1251	Mar-14	1108	1022 – 1274	1.44
Berkeley Residences	22	8	36.36	4	1515	1480 – 1532	Nov-13	1496	1400 – 1591	1.27
Thomson Three	445	46	10.34	3	1380	1290 – 1488	Sep-13	1363	998 – 1533	1.25
Forestville	653	170	26.03	13	739	654 – 779	Jun-13	730	565 – 816	1.23
Waterwoods	373	186	49.87	18	809	766 – 846	Nov-13	801	743 – 863	1.00

Source: URA

Table 2b: Projects Sold At A Hike in April 2014

 

Project Name	Street	Region	Property Type
Sky Vue	Bishan	RCR	Non-Landed
Duo Residences	Fraser Street	CCR	Non-Landed
The Quinn	Bartley Road	OCR	Non-Landed
Nine Residences	Yishun	OCR	Non-Landed
La Fiesta	Sengkang Square	OCR	Non-Landed
Lush Acres	Fernvale Close	OCR	EC
The Skywoods	Dairy Farm Heights	OCR	Non-Landed
Q Bay Residences	Tampines Street 86	OCR	Non-Landed
Rv Residences	River Valley Road	CCR	Non-Landed
Guillemard Suites	Guillemard Road	RCR	Non-Landed
Liv On Wilkie	Wilkie Terrace	CCR	Non-Landed
Ecopolitan	Punggol Walk	OCR	EC
Rezi 3two	Geylang	RCR	Non-Landed
The Santorini	Tampines	OCR	Non-Landed
Berkeley Residences	Lorong N Telok Kurau	OCR	Non-Landed
Thomson Three	Bright Hill Drive	RCR	Strata-Landed / Non-Landed
Forestville	Woodlands Drive 16	OCR	EC
Waterwoods	Punggol Field Walk	OCR	EC

Source: URA

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