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November new home sales show buyers in charge

[SINGAPORE] Sales figures for new private homes last month underline a new reality in which location and attractive pricing are the main draws for buyers who are becoming more selective, analysts believe.

Data from the Urban Redevelopment Authority (URA) yesterday showed that excluding executive condominiums (ECs), developers moved 1,228 units in November, a 15 per cent increase from the 1,070 in October.

This works out to a take-up rate of 95 per cent for the 1,293 new private homes launched last month, and is comparable to the previous month when 1,124 units was released.

Buyers have turned more cautious following a total debt service ratio (TDSR) framework put in place in late June; developers sold just 481 private homes in July, less than a third of June's 1,806. But consultants believe that last month's tally shows that there is still interest for attractively priced and well-located projects.

Said Christine Li, head of research and consultancy at OrangeTee: "This could imply that there is demand in the market, and investors are simply biding their time."

November sales were boosted by strong demand for the Duo Residences in Bugis, where 600 units were sold at a median price of $1,999 per square foot (psf), and Alex Residences at Redhill, where 171 units were moved at a median price of $1,706 psf. The pricing for Duo Residences was seen as particularly attractive by analysts.

Successful developers adjusted prices to match current buyer sentiment, said Mohamed Ismail, CEO of PropNex Realty.

Alan Cheong, head of research at Savills Singapore, said that the November numbers affirm his belief that the TDSR won't cause a "slash and burn" in the market and will merely slow down the rate of sales.

In terms of performance by region, Core Central Region (CCR) saw more homes sold than the Rest of Central Region (RCR) and Outside Central Region (OCR) combined last month. Only two new CCR projects were launched, Duo Residences and Clermont Residence at Tanjong Pagar, but the overall sales of 662 units made up 54 per cent of all transactions.

But Nicholas Mak, executive director for research and consultancy at SLP International, said that this was an "unusual" event unlikely to repeat itself often in the near future, as there are not many projects like Duo Residences in the pipeline.

RCR sales volume was up 29 per cent from October at 352 units, backed by sales at Alex Residences, while OCR transactions fell 70 per cent to 214 homes, primarily on the lack of new launches.

Chia Siew Chuin, director of research and advisory at Colliers International said that homebuyers may be turning to reasonably priced homes in CCR and RCR given the narrowing price gaps between mid-to-high-end homes and mass market homes.

She said that some 73 per cent of new homes sold last month were in the range of $1,500-2,500 psf. "This is a contrast from past trends, where the majority of new homes were transacted at below $1,500 psf."

The lowest selling price on a psf basis in November was for a unit at The Inflora in Tampines sold at $723 psf, while the most expensive unit was one at Twin Peaks in Leonie Hill that transacted at $3,052 psf, SLP's Mr Mak said.

Including ECs, 1,714 new homes were sold last month, 42 per cent higher than the month before. Sky Park Residences in Sembawang and Waterwoods in Punggol were the best sellers for ECs last month.

For the first 11 months of the year, 14,678 new private homes (excluding ECs) were sold. Analysts are expecting total sales for this year to be close to 16,000, a significant dip from the record 22,197 last year.

Desmond Sim, associate director at CBRE Research, believes that prices will see a "marginal rise of around 2 per cent" on the year.

December should be fairly quiet due to the festive season, with sales below 1,000 units, analysts said, and with demand likely to pick up again after Chinese New Year as pending projects hit the market.

"Going forward, pricing is key and developers have to price attractively to move units quickly," said Eugene Lim, key executive officer at ERA Realty.

Projects that may be launched in the first half of next year include Marina One developed by M+S, City Development's South Beach Residences, The Panorama by Wheelock Properties and Keppel Land's project at Kim Tian Road. Sales could be anywhere from 10,000 to 16,000 units next year, with some consultants expecting prices to be flat or marginally lower.