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Developers' sales slump amid lack of new major launches

Tepid showing in May likely to continue in June; new launches to be rolled out in July

Developers' sales will probably be more subdued in June, when virtually no new project launches will take place, property consultants said.


DEVELOPERS' sales will probably be more subdued in June, when virtually no new project launches will take place, property consultants said.

Sales were already tepid in May: 638 private residential units were sold, 45 per cent fewer than the 1,167 in April. And 207 executive condominium (EC) units were sold, buoyed mainly by the launch of Westwood Residences in Jurong West, up from 126 in April.

That brought developers' total residential sales to 845 units - still a significant drop from the 1,293 in April.

The sales data for May, obtained by the Urban Redevelopment Authority (URA) through a developers' survey, confirmed that April's spike in sale volumes to an 11-month high on the back of major project launches was an exception rather than the norm in today's market.

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Developers had released fewer residential units in May - 979 units, including ECs, down from 1,382 in April.

PropNex CEO Mohammed Ismail said: "After four consecutive months of increase in transaction volume, with fewer new launches in May and no major launch in June due to the school holidays, it is predicted that June will be another quieter month for new home sales."

Colliers International director of research and advisory Chia Siew Chuin expects developers' sales to moderate even further to around 500 units in June, as a result of the school holidays.

Developers will start rolling out new projects again in July; these include two EC projects The Vales in Anchorvale Crescent and Brownstone in Canberra Drive, and the massive 1,390-unit High Park Residences in Fernvale, where the majority of units will cost less than S$1 million.

Last month, the 480-unit Westwood Residences EC by Koh Brothers and Heeton Homes, the sole new launch in May, became the bestseller for the month, with 118 units sold at a median price of S$803 per square foot.

Two projects launched in April continued to move units. UOL's Botanique at Bartley sold 94 units in May at a median price of S$1,292 psf, taking its tally to 345; Frasers Centrepoint's North Park Residences in Yishun moved 59 more units in May at a median S$1,397 psf, taking the project's cumulative sales to 538.

Among existing projects, CapitaLand's Sky Habitat in Bishan released 139 more units, but sold just 12 at a median price of $1,619 psf. Wheelock Properties released 60 more units at Panorama, and sold 44 at a median of S$1,232 psf.

With affordability still a crucial factor for buyers constrained by lending curbs, three-quarters of total private home sales in May took place in the suburban region (Outside Central Region); the region accounted for 45 per cent of launches islandwide, data from URA showed.

Private residential units in the city-fringe (Rest of Central Region) and in the Core Central Region made up 16 per cent and 11 per cent of sales respectively.

SLP International executive director Nicholas Mak said: "In the absence of a major shift in the government's real estate policy, the primary market sales volume is expected to remain soft. For the whole of this year, the total developers' sales volume is projected to range between 6,500 and 9,000 private housing units, which would be about the same level as that in the previous year."

He noted, however, the signs of "steady underlying buying demand that is supporting the residential primary market", where the fall in the sales and number of launched units this year is due not only to the cooling measures, but also to fewer land parcels sold in 2014 than in 2013 and 2012.

He posited that with government land sales tapering from there being fewer land parcels in the confirmed list and a low probability of developers triggering a reserve list site, the number of new housing units that may be launched for the rest of this year and the next is expected to fall.

Based on SLP's analysis, the 21.2 per cent year-on-year drop in the number of private homes (excluding ECs) sold by developers in the January-to-May period is smaller than the 29.6 per cent fall in the number of units launched in the same period. Developers' inventory of launched and unsold units has also remained fairly steady between 6,500 and 7,300 units from January 2014 to May 2015.

But Colliers' Ms Chia's prognosis is more sombre, in view of some 19,359 unsold private residential units from launched projects and unlaunched projects with prerequisites for sale as of Q1 2015. "Developers will adopt a restrained stance on new launches, while homebuyers adopt a wait-and-see attitude, given the substantial supply," she said.

Among upcoming new launches, Singhaiyi Group and Kay Lim Investment will run e-applications between July 3 and July 12 for their 517-unit EC project The Vales, ahead of its launch on July 18.

CDL will begin the sale of its 638-unit EC project Brownstone towards the end of July, with marketing materials naming July 25 as the tentative launch date.

Preview and sales for private condo project High Park Residences will also begin in July. The project takes up two sites totalling some 366,000 sq ft that were acquired by Chip Eng Seng, Kim Seng Heng Realty and Heeton Homes last August. The 1,390 units range from studio units to five-bedroom units, four bungalows and 10 semi-detached units; there are also nine F&B shops.

Chip Eng Seng executive director Hoon Tai Meng told The Business Times the average price will be S$940 to S$950 psf; some studio units start at below S$400,000.

Noting that the nearby projects Rivertrees Residences and Riverbank @ Fernvale have already sold out their smaller units, he added: "Small units are still in great demand, and only around 200 units in the project are S$1 million or above, so the project should move well. With the Total Debt Servicing Ratio (TDSR), bigger units may face market resistance."

Mr Ismail said that buying interest would remain selective, with bargain hunting the main focus among buyers. "The market is not in a stalemate just because there are no new launches. There is a pick-up in buying rhythm," he added, taking a cue from recently launched projects that are still moving units. Projecting that new home sales would hit 8,000 units (excluding ECs) this year, up from 7,557 units last year, he said that headwinds stoked by a rising supply of new homes, a softer leasing market and impending interest rate hikes are all expected to put a lid on home-buying demand.


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