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Lowest February private home sales since 2008
THE 382 private homes that developers sold last month, though 2.1 per cent higher than the previous month, marked the lowest February sales since the 174 units sold in February 2008 when home buying was hit by the global crisis.
The continued weak sales last month came amid a slowdown in launches by developers during the Chinese New Year period.
However, sales are expected to recover with developers lining up launches from this month, say property consultants. Already, Kingsford has begun sales this month at Kingsford Waterbay along Upper Serangoon View. Frasers Centrepoint is scheduled to release its 920-unit North Park Residences next in Yishun Central towards the end of this month. UOL's 797-unit Botanique at Bartley could follow soon after that.
Pricing will be key to move sales for developers, said agents. "As 2014 has shown, some 70 per cent of transactions are below S$1.5 million due to loan restrictions and ABSD (additional buyer's stamp duty)," said ERA Realty key executive officer Eugene Lim.
In setting the pace of launches, observers said, developers will have to factor the five-year deadline to complete development and sell all the units in a residential project - a condition for the upfront remission of additional buyers' stamp duty on the site's purchase - as well as guess how soon the authorities could start lifting some of the cooling measures.
From the buyers' perspective, "a mounting supply of new homes, a less buoyant leasing market and an impending rise in interest rates" are among the factors that are expected to keep a lid on home-buying demand in 2015, said PropNex CEO Mohamed Ismail.
JLL forecasts developers' full-year private home sales to come in at 4,800-5,800 units. CBRE estimates the figure at 6,000 to 7,000 units, ERA Realty at 7,500-8,500 units, and PropNex at 9,000 units. Last year, the figure was 7,316 units, about half the 14,948 units in 2013 and just one-third the record 22,197 units in 2012.
It is also expected to be a busy launch front this year for executive condominium (EC) projects. CBRE forecasts possibly seven EC launches adding up to more than 4,600 units. These projects include MCL Land's 1,327-unit Sol Acres project in Choa Chu Kang Grove. This will be the biggest EC project ever to be launched.
Over at Yishun Street 51, City Developments and JBE Holdings could go head to head with two EC developments next to each other. ERA's Mr Lim predicts EC sales of 1,000 to 2,000 units this year while ProNex's Mr Mohd Ismail expects the number to surpass 2,000 units.
ECs are a private-public housing hybrid with initial buyer eligibility and resale conditions that are fully lifted 10 years after an EC project has been completed.
The 382 private homes transacted in the primary market last month was roughly half the 739 units developers sold in the same month last year. GuocoLand's Sims Urban Oasis was the top seller in February, with 112 units sold at a median price of S$1,397 per square foot. This was the only private residential project launched last month, noted Colliers International director Chia Siew Chuin.
There were no EC projects launched last month. Developers managed to move 65 EC units in February from existing projects on the market.
Desmond Sim, head, CBRE Research, Singapore & South-east Asia, said that with the upcoming launches for the rest of this year, amid a growing unsold stock, "developers will put more effort in both marketing and timing their projects to ensure higher success rates".
Chua Yang Liang, JLL South-east Asia and Singapore research head, said that developers and buyers are both likely to remain cautious. "Developers are likely to feel the pressure more to cut prices, given the state of the unsold inventory (both launched and unlaunched) at some 21,000 private homes."
Amid the current environment where "everyone expects prices to drop further", argues Knight Frank executive chairman Tan Tiong Cheng, "unless your project is priced to sell, there is very little to attract buyers, especially if there are similar developments in the vicinity". "To stand out from the crowd, you need to have a refreshing or niche design".
UOL group president (property) Liam Wee Sin highlighted that the key consideration as to whether a developer can launch a project in the current market is the site's location. "If the site has a strong location attribute, such as being next to an MRT station - combined with strong design/high specifications, and realistic pricing, the developer will go ahead with the launch. There will still be healthy take-up during the launch for such a project."
A case in point would be UOL's release of the 99-year leasehold Thomson Three condo project in September 2013, after the total debt servicing ratio framework was introduced. Today, it is left with only eight units of the 445-unit project. "We priced this project realistically from the onset, at an average of S$1,338 psf," said Mr Liam.