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SINGAPORE PROPERTY

New home sales set to rise after falling in Oct on fewer launches, options curb

URA data shows Oct number down 52% to 642 units, with only one project launched; consultants see rebound in Nov and Dec

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Developers' private home sales halved in October over the preceding month amid a paucity of new launches and an official clampdown on the re-issuance of options to purchase (OTPs) by developers.

Singapore

DEVELOPERS' private home sales halved in October over the preceding month amid a paucity of new launches and an official clampdown on the re-issuance of options to purchase (OTPs) by developers.

However, property consultants are predicting a recovery in primary-market private home sales in November and December with upcoming launches.

These include The Landmark in Chin Swee Road, Ki Residences at Brookvale in the Sunset Way locale, Phoenix Residences in Phoenix Avenue (off Choa Chu Kang Road) and Clavon in Clementi Avenue 1.

Even without the re-issuance of options, a large number of homebuyers have the financial means and are in a position to exercise the option within the normal validity period, said ERA Realty's head of research and consultancy, Nicholas Mak.

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"The new launches lined up for this month and next are likely to stimulate primary-market sales volumes, which should recover quite quickly from the October trough."

Data released by the Urban Redevelopment Authority (URA) on Monday based on its survey of licensed housing developers showed that 642 new private homes were sold in October, 51.7 per cent fewer than the 1,329 units sold in September. Year on year, developers' private home sales shrank 31.1 per cent from 932 units in October 2019.

The drop was partly due to the high base in the previous month, where new launches such as Penrose, Verdale and Myra helped to draw buyers, noted PropNex Realty.

The sole project launched in October, Hyll on Holland, saw five units being sold at a median price of S$2,729 psf.

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In all, developers released just 423 new units last month, a drop of 68.4 per cent from the 1,340 units in September and the lowest monthly figure since December 2019, when 370 units were released.

Besides Hyll on Holland, the 423 units put on the market last month included newly unveiled units in projects that have been on the market for some time, such as The Garden Residences in Serangoon North View, One Pearl Bank and Kent Ridge Hill Residences.

The curbs on re-issuance of OTPs by developers - unveiled on Sept 28 - were also behind the sharp slowdown in developers' sales last month.

"Some buyers, though they belong to the group who do not need re-issuance of OTP to make their purchase, waited on the sidelines to see if developers will adjust their prices," said Huttons Asia research director, Lee Sze Teck.

Colliers International's Singapore research head, Tricia Song, said: "The projects most affected by the tightened rules are likely those targeted at HDB upgraders; these buyers must now sell their public housing flat first, and then rent a home while waiting for their new private home to be ready.

"In fact, 72 per cent of the total developer sales in October 2020 were at the median price of S$1,000-S$2,000 psf, compared with 88 per cent in September 2020, showing a decreased proportion of HDB upgraders."

On a more optimistic note, Huttons' Mr Lee said: "Buyers who aspire to upgrade their lifestyle took advantage of the buoyant conditions in both the HDB and private resale segments to market their properties for sale.

"There was a noticeable increase in resale activities in October vis-a-vis September, and this will translate to higher new private home sales once the resale transactions are completed and funds are in."

JLL Singapore's senior director of research and consultancy, Ong Teck Hui, said while the clampdown on the re-issuance of OTPs may have some impact on the market, "there is still firm interest from buyers due to a positive market outlook as the economy is expected to recover next year with a vaccine becoming available as well".

Colliers' Ms Song highlighted the Ministry of National Development's written answer on Nov 2 to a question in Parliament that disclosed the level of re-issuance of OTPs.

Since January 2019, some 5,500 private housing transactions had OTPs for the same units re-issued to the same purchasers. Close to 70 per cent of these re-issued OTPs have been exercised, on average less than six months from the date when the first OTP was issued. Only about 1 per cent of the re-issued OTPs eventually lapsed.

Knight Frank Singapore research head Leonard Tay said that as the market adjusts to the OTP re-issuance curbs, developers' private home sales volume should return to "fairly normal levels".

Edmund Tie & Co chief executive Ong Choon Fah said the current high liquidity and low interest rate environment - fuelled by governments pumping money into pandemic-hit economies - leaves fewer alternatives to property investment, not just in Singapore but in other cities as well. "That said, we should be mindful of our own risk capacity when investing in property."

In the first 10 months of this year, developers have sold 8,021 private homes, 4.5 per cent fewer than the 8,401 units sold in the first 10 months of last year.

Property consultants' forecasts for full-year 2020 range from about 8,900 to 9,500 units - below last year's 9,912 units.

Christine Sun, head of research and consultancy at OrangeTee & Tie, said: "Given that fewer new projects could be launched next year, especially mega-projects, we estimate that around 8,500 to 9,500 new homes could be sold in 2021."

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