New home sales down 42% in June; analysts paring 2015 forecasts

Singapore

PROPERTY consultants are now expecting a lower range for developer sales of private homes this year - 6,000-7,500, following the release of June numbers by the Urban Redevelopment Authority (URA) on Wednesday.

Developers sold 42 per cent fewer private homes or 375 in June, down from 643 in May and taking the tally for the first half of the year to 3,496 - a drop of almost 21 per cent from a year ago.

On the supply side, developers are seen slowing down on new launches, given the scaleback in the sale of state land; instead, they are likely to focus on clearing their existing inventory. Demand-wise, many potential buyers are struck by inertia due to the prevailing property cooling measures (including the total debt servicing ratio), coupled with weak economic growth.

Some market watchers are coming around to the view that a much-anticipated removal of cooling measures may not materialise any time soon in the absence of hard evidence of a significant, broad-based price correction.

URA data shows that no new projects were launched last month; instead, developers released 219 units from existing projects. This is lower than the 500 launched in May.

But buoyed by the 1,568 released in April, the preliminary Q2 launch tally comes to 2,287. This is nearly double the number rolled out in Q1.

In similar fashion, Q2 sales were shored up by April's stellar showing.

In June, the top selling project was UOL Group's Botanique at Bartley, with 59 units transacted at a median price of S$1,301 per square foot, followed by Lakeville along Jurong Lake Link, where developer MCL Land found buyers for 25 units (median price: S$1,320 psf).

Wheelock Properties also moved 25 units at The Panorama in Ang Mo Kio Avenue 2 at S$1,231 psf median price. At North Park Residences in Yishun Central 1, Frasers Centrepoint transacted 24 units at a median price of S$1,355 psf.

JLL national director Ong Teck Hui said: "The fact that these developments are near existing or future MRT stations and amenities and priced affordably, being suburban projects, has helped them to attract buyers and move sales."

In the executive condo (EC) segment, no new units were launched in June. Still, developers moved 110 EC units out of the inventory already on the market - about half the 210 in May. In all, 446 were sold in the primary market in Q2, taking the preliminary first-half tally to 772. ECs are a public-private housing hybrid,

ERA Realty key executive officer Eugene Lim predicts that the year would end with developers selling 1,500-1,600 units. This would be similar to last year's 1,578. "The EC market is saturated, with so many new launches coming up as well as most existing projects on the market still not fully sold."

Upcoming EC project launches include The Vales in Anchorvale Crescent, The Brownstone in Canberra Drive and Sol Acres in Choa Chu Kang Grove. Other EC projects slated for launch by year-end include JBE Holdings' Signature at Yishun, and Frasers Centrepoint and Keong Hong's Parc Life in Sembawang.

Said Mr Lim: "As developers of EC projects are lining up for launch in the second half of 2015, developers of mass market private condo projects may go slow to avoid a collision - given that they are catering to similar market segments.

"So we expect fewer suburban private condo project launches this half. Instead, developers may focus on pushing out more projects in city-fringe locations from sites bought at state tenders earlier, such as in Potong Pasir, Prince Charles Crescent and Lorong Puntong."

It may also be a good time for developers to launch landed housing projects. On Friday, Bukit Sembawang Estates will release phase 7 of its Luxus Hills landed development off Ang Mo Kio Avenue 5. The latest phase will comprise 28 terrace houses and four semi-detached houses.

Desmond Sim, head, CBRE Research, Singapore & South East Asia, predicts that developers would sell about 6,000-7,000 private homes this year; many of his peers have similar forecasts. "With the significant pullback on Government Land Sales, the number of unsold stock, which stood at about 29,000 units at end-March 2015, is being steadily reduced. We do not expect this number to increase."

Mr Ong said: "With talk of an early election, the question is whether developers would stiffen prices if they anticipate cooling measures being moderated (post-election). That could slow sales leading to a lower transaction volume in the interim."

Giving a different take, Colliers International director Chia Siew Chuin said: "While buyers will return to the market if project units are rightly priced, by and large, homebuyers also generally expect prices to continue to soften further. Some buyers are reticent to make a purchase now, when home prices could foreseeably be lower in 6-12 months' time."