Developer sales in Q3 lowest since worst phase of global crisis

Combination of sluggish sales and price declines spells painful journey ahead for property market, say observers

Kalpana Rashiwala
Published Wed, Oct 15, 2014 · 09:50 PM


THE 648 private homes developers sold last month were up 48 per cent from 437 units in the Hungry Ghosts-struck month of August. However, the September figure is half that of the 1,237 units in the same month last year.

This takes the preliminary third-quarter tally to 1,596 units. This is a 40 per cent drop from Q2 and the lowest figure since the 419 units developers sold in Q4 2008 during the nadir of the global crisis, according to Urban Redevelopment Authority (URA) figures released on Wednesday.

"In the year before TDSR (total debt servicing ratio) was imposed (in late-June 2013), quarterly sales volume was about 5,000 units on average - or roughly three times more than the volume in Q3 2014," observed JLL national director Ong Teck Hui. "This shows the extent to which demand has weakened in the primary market," he added.

CBRE Research, Singapore head Desmond Sim too noted that there has been only a marginal improvement in sales, on a six-month rolling total basis.

In the first nine months of this year, developers sold 6,005 private homes, and property consultants polled on Wednesday predict the full-year tally will be in the 7,000-9,000 unit range. This marks a big downward revision from the 10,000-14,500 unit sales most consultants had indicated in a BT poll in mid-January this year. Some had been even more bullish; ERA Realty key executive officer Eugene Lim had forecast sales of 15,000 to 18,000 units.

When contacted on Wednesday, Mr Lim gave a drastically reduced estimate of 8,000-9,000 units for the whole of this year. "Now we can fully see the effects that the cooling measures as well as the TDSR framework are having on buyers; they force buyers to be very selective as they are constrained by the amount of loan they can get. Price quantum remains key. It is easier to move units priced S$800,000-S$1.2 million than units above S$1.5 million."

Mr Lim expects the pace of sales to be similarly measured next year. "In the absence of the government tweaking any of the cooling measures, we can possibly expect a similarly muted market going forward," Mr Lim said.

Agreeing, JLL's Mr Ong said: "The main threat is that our economy is slowing down and how that will affect sentiments in the property market."

A seasoned market watcher noted that developers have trimmed their price expectations for new launches and at times also cut prices of existing launches, sometimes through a "star buy" campaign of discounts on selected units.

"When prices soften, there is some buying before sales stall again. It is not a situation of cutting prices and you clear all your unsold stock. TDSR is biting hard," he said. "Developers are cutting prices selectively to avoid a downward price spiral - otherwise things will be messy."

This mix of price declines and sluggish sales, with no end in sight of the cooling measures, spells a painful journey ahead for Singapore's real estate market, reckon most observers.

URA's data also show that developers sold 59 executive condo (EC) units in September, just one unit more than the August sales of 58 units. But the EC sales engine is set to rev up in Q4, with sales bookings slated to begin for at least three EC projects - Lake Life near Jurong Lake, Bellewoods in Woodlands and Bellewaters in Sengkang.

Developers found buyers for 168 EC units in Q3, slightly more than the 154 units in Q2. In Q3 last year, the figure was 1,240 units.

In the first nine months, developers transacted 471 EC units.

Last year, they sold 3,588 ECs and 14,948 private homes.

Based on URA's latest data, last month's top-selling project was Keppel Land's Highline Residences condo near Tiong Bahru MRT Station, with 142 units transacted at a median price of S$1,848 per square foot (psf), followed by UOL Group's Seventy Saint Patrick's with 110 units sold at a median price of S$1,652 psf.

This quarter's sales numbers will be supported by the recent launch of Marina One Residences. The market is also expecting the release soon of Sophia Hills at Mount Sophia, as well as two mass-market projects: Tre Residences in Geylang East Avenue 1 and Symphony Suites in Yishun Avenue 9, noted CBRE.

Excluding ECs, developers launched 514 private homes last month, up from 399 units in August.

No ECs were launched in both months.

*Analysis shows median price declines of houses in majority of projects

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