You are here
Macroeconomic volatility weighs on new home sales
MACROECONOMIC volatility rocked Singapore's property market in September, when property developers sold only 341 private homes - the lowest figure so far for 2015, said the Urban Redevelopment Authority (URA) on Thursday.
The number of units sold, which excludes executive condominiums (ECs), is 34 per cent lower than the 513 units moved in August; the figure also falls far short of the 648 units sold in September 2014.
Among the usual reasons that have been trotted out to explain the slump in sales were that developers had hesitated launching projects because of the general election, fearing policy changes. And then it was the Hungry Ghost month, which dampens buying; the school holidays, which usually takes potential buyers out of the country for vacations, was also cited as a factor.
But consultants now point to September's market volatility, on top of the above factors, that tamped down buying sentiment: The erratic stock market hit a three-year low on Sept 29. Investors were haunted for a while by the possibility of a technical recession - it didn't happen - and monetary easing, which happened, but only in a small way. Add to this the uncertain timeline for the US' interest rate increase.
Ong Teck Hui, national director, Research & Consultancy at JLL, said: "The drop in September shows a further weakening in market confidence, and this could be due to the softening economy and more difficult business environment."
Buyers' caution has a knock-on effect on developers' willingness to launch units for sale, he added.
Alan Cheong, Savills Singapore's research head, said poor investor sentiment caused property buyers to withhold from buying, but he qualified that the correlation between the property and equity markets was no longer as tight, now that loan curbs are in place.
"The total debt servicing ratio framework has helped to ringfence the stock market from the property market by controlling how much property buyers can borrow. Before its implementation, people could remortgage their homes and invest the cash in stocks. When stocks crashed, they were forced to sell their homes."
September's condo launches were subdued; only 391 units were placed on the market. None of them were new launches, noted Nicholas Mak, executive director at SLP International.
The best-selling projects were High Park Residences, which sold 46 units at a median price of S$941 psf. Botanique at Bartley sold 38 units at a median price of S$1,293 psf, and Highline Residences, 21 units at a median price of S$1,857 psf.
Consultants expect 2015 to finish with developer sales of around 7,000 to 8,000 units. The last trough was in 2008, when only 4,264 units were sold.
Last year, developers sold 7,316 units, half of the 14,948 units moved the year before that. These numbers exclude ECs.
Inclusive of this public-private hybrid housing, developers sold 629 homes in September 2015, down from 979 units in August and 707 units in September 2014.
The only new EC project launched in September was Signature at Yishun, a 525-unit project, which sold 93 units at a median price of S$768 psf.
Sol Acres, The Brownstone, The Terrace and Bellewaters sold more than 100 units among them, with median prices ranging from S$772 psf to S$820 psf (see chart).
Although ECs did well in Q3, selling about half the 2,387 units launched, sales progress after the initial launches stayed slow, which hints at buyers' resistance at current price levels, Mr Ong from JLL said.
OrangeTee research analyst Celine Chan said she expects October's developer sales to bounce back from September's low with the launch of two major projects: Thomson Impressions at Lorong Puntong by Nanshan Group, and Principal Garden at Prince Charles Crescent by UOL.
In Yishun, City Developments' The Criterion EC project was launched early this month; The Andrew Residences in Potong Pasir could be launched in November, and Wandervale, an EC project in Chua Chu Kang, in December.
Sources told The Business Times that The Criterion has sold only about 30 of its 505 units at an average price of S$770 psf. CDL did not comment.
A market watcher suggested likely reasons for the slow sales. One could be that CDL made an error of strategy by letting JBE Holdings, the developer of the neighbouring Signature at Yishun, to be first off the blocks with its launch.
"There may be a saturation of ECs in the north. Potential buyers may also be waiting for the HDB to launch its build-to-order exercise in Bidadari next month."
Another said: "In any vicinity, there is a limited pool of interested buyers. Signature captured the first wave, and there wasn't enough demand for a second wave. It's down to timing, not pricing. CDL is a known name, and the quality of its product is clearly better than Signature's."