Developers’ 2022 sales slip to 14-year low on crimped supply, holiday lull

NEW private home sales plummeted to their lowest level since the global financial crisis in 2008, weighed down by an absence of new project launches and the seasonal year-end holiday lull. 

According to data released by the Urban Redevelopment Authority (URA) on Monday (Jan 16), developers sold a total of 170 units, excluding executive condominiums (ECs), in December 2022, down 34.6 per cent from the 260 units moved in the month before. 

The latest December sales figure is also 73.8 per cent less than the 650 units sold in the same month in 2021, and is the lowest since January 2009, when just 108 units were transacted.  

The deep dive brought new sales volume for the year to 7,153 units – just over half of the 13,027 units sold in 2021 and the lowest since 2008, when 4,264 units were transacted in the aftermath of the global financial crisis. This was also lower than the 7,316 units sold in 2014, after the 2013 property cooling measures, noted Tricia Song, CBRE’s head of research for South-east Asia.

Considering the “cocktail of challenges” in 2022, from recession concerns to rising interest rates and growing inflationary pressures, as well as the latest round of cooling measures in September, PropNex Realty’s head of research and content, Wong Siew Ying, held that the new home sales of more than 7,100 is “quite decent”.

The “relatively dismal” sales figure chalked up in December is not to say demand is lacking, she said. 

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“Many buyers are still in the market for new homes, as evidenced by the positive sales response at Sceneca Residence,” she added. The project had sold 160 units, or 60 per cent of its 268 units, at an average price of S$2,072 per square foot (psf) when it opened for sales on Jan 14.  

Instead, the December dip was due to a lack of new launches in the month, as well as depleted unsold stock – especially in the Rest of Central Region (RCR) and Outside Central Region (OCR), which hold the majority of owner-occupied and Housing & Development Board (HDB) flat upgrader demand, said Wong. 

OrangeTee & Tie’s senior vice-president of research and analytics Christine Sun added that a slump at the end of the year is par for the course, since would-be buyers were on holiday and developers held back on new launches. 

The sole launch in December 2022 was for the 618-unit Tenet EC at Tampines Street 62. Some 72 per cent of the development’s units were sold on the first day of its launch, at a median price of S$1,381 psf.  

“The good sales performance of (Tenet) signals that demand remains strong for ECs, despite the recent cooling measures and rising interest rates,” said Sun. 

Tenet’s sales also propped up the home-sales figure inclusive of ECs, with 638 units sold last month, an increase from the 446 units sold in November. This is, however, still down 11.3 per cent from the 719 units sold in December 2021.

Meanwhile, only 45 units, excluding ECs, were launched last month – a decrease of 85.9 per cent from the 319 units launched in November and around 88.4 per cent fewer than the 383 units launched in the year-ago period. 

Among the three market segments, the Core Central Region (CCR) continued to lead in condo and private apartment sales, accounting for 52 per cent of primary sales in December, noted Lam Chern Woon, head of research and consulting at Edmund Tie. 

Projects that sold well in the prime CCR area last month included the 638-unit Leedon Green at Farrer Road, which sold 11 units last month at a median price of S$2,886 psf; the 230-unit Perfect Ten in Bukit Timah, which sold 10 units at a median price of S$3,122 psf; and the 296-unit One Holland Village Residence, which sold seven units at a median price of S$2,812 psf.

Collectively, these projects made up 31 per cent of the market segment’s sales in December 2022. 

Projects in the RCR city-fringe areas accounted for 32 per cent of primary sales, while those in the OCR suburban neighbourhoods made up 16 per cent of new sales during the last month of the year.  

“Homebuyers (might have also seen) more value in CCR home prices, which have run up less in this market cycle,” said Lam. 

CBRE’s Song observed that the largest proportion – 27.1 per cent – of new private homes sold (excluding ECs) in December were in the S$3 million to S$5 million range. This was followed by properties in the S$1.5 million to S$2 million bracket, at 24.7 per cent.

Edmund Tie’s Lam added: “The increasingly tight financing environment would have relatively less impact on buyers shopping in the CCR segment, while the continual easing of borders has also brought more well-heeled foreign participants into this market segment.” 

He expects to see foreign buyer demand buoyed by the return of buyers from China this year as the mainland reopens.

Foreign demand could reach 6-7 per cent of sales volume, he said, in line with pre-pandemic numbers in 2019, compared to the 4.7 per cent seen in 2022. However, a surge is unlikely, with higher stamp duty rates still in place for foreign buyers.

One of the top-selling projects in December was Riviere, a 455-unit luxury condo at Jiak Kim Street, next to the site of former nightspot Zouk. Developers sold 14 of its units at a median price of S$2,978 psf last month. 

Mohan Sandrasegeran, senior analyst of research and content creation at One Global Group, pointed out that Riviere has been a “consistent top performer in URA’s monthly developer sales”, ranking among the top five best-selling non-landed developments for at least half of the year. 

“(This) is due to the lack of other significant launches in the region,” he said. “In fact, with its attractive location and luxurious features, Riviere was the top-selling project in the RCR segment in the fourth quarter of 2022.” 

Knight Frank Singapore research director Leonard Tay estimated that, in total, around 7,153 private homes, excluding ECs, were sold in the whole of 2022. This was well below the agency’s earlier projection of 8,000 to 9,000 units for the year.

Tay said he expected new unit sales to improve in 2023, with some 30 new projects comprising about 12,000 units forecast to be launched across the island. 

“That should bring some relief to the undersupplied situation and provide homebuyers with more product choices in a buffet spread of locations,” he said. 

That said, ERA Realty head of research and consultancy Nicholas Mak believed that the sales performance at these new launches would depend greatly on the pricing of individual projects, as well as macroeconomic factors, such as the economic climate, job market and interest rates. 

“In a favourable climate, developers could sell about 9,000 to 10,000 housing units this year,” he said. 

Project launches in the shorter term include Gems Ville, a freehold condo along Geyland Lorong 13; the 99-year leasehold The Botany at Dairy Farm; and Terra Hill, a freehold condo at Yew Siang Road. All three are expected to open their showflats during the Chinese New Year period, said Huttons senior research director Lee Sze Teck. 

Lee added that stable land prices mean that the market is less likely to see benchmark prices in the coming year. 

Still, he highlighted that “higher construction costs and low unsold supply in the market may add upward pressure by up to 5 per cent in 2023”.