New home sales to hover at 10,000 in 2020: analysts

DEVELOPERS sold 1,217 new homes in December, up almost 60 per cent over the November figure, data compiled by analysts showed.

This brought the unit tally to 10,008 for 2020, a year when Singapore recorded its worst recession as a global pandemic resulted in lockdowns in many countries.

It was an "amazing year", said Christine Sun, OrangeTee & Tee director and senior vice-president of research and analytics, who looked at December caveats filed with the Urban Redevelopment Authority (URA) on Monday.

To be clear, the December transactions could change when URA releases its monthly sales data this Friday, and again when the Q4 Real Estate Statistics is published on Jan 22 due to downward adjustments for aborted sales.

If the final figure is lower when aborted units are factored in, the total new homes for 2020 could be on par with the 9,912 units sold in 2019, said Ms Sun. It would also be above the 8,795 units sold in 2018.

On a yearly basis, December sales more than doubled from the 538 units of December 2019.

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New-home sales were mainly driven by two key launches last month - the 640-unit Clavon, which sold 473 units, and 660-unit Ki Residences at Brookvale, which moved 172 units.

Outside of Central Region (OCR) accounted for three-quarters (75.9 per cent) of the total new home sales; 19.1 per cent of sales were in the Rest of Central Region (RCR) and 4.7 per cent, in the Core Central Region (CCR).

The other top-selling projects include Parc Clematis, Treasure at Tampines, Jadescape and Piermont Grand.

The key driver pushing sales is low interest rates, and this is seen elsewhere too, said Desmond Sim, CBRE's head of research, Singapore and Southeast Asia. He noted that low rates in the UK and US have also led to healthy home sales there.

While the recession has led to job losses, there are cash-flush buyers who have benefited from "wealth creation over the past three to five years", he said.

These buyers include those who became millionaires through en bloc sales, he said. The last big wave of en bloc or collective sales occurred in 2017 and 2018; many homeowners jumped on the bandwagon and developers actively leveraged the potential of existing developments. The real estate market witnessed 31 deals in 2017 for a total of S$8.5 billion, and 36 deals in 2018 for a total of S$10.3 billion.

Homebuyers' optimism has pushed prices up. According to the URA flash estimate published on Jan 4, prices of private homes in Singapore rose 2.1 per cent quarter on quarter in Q4 2020. This was the highest quarterly increase since the 3.4 per cent notched in Q2 2018, before the last round of cooling measures kicked in. This comes on the heels of a 0.8 per cent increase in Q3 2020. For 2020 as a whole, prices rose 2.2 per cent.

In 2019, the private residential property index grew by 2.7 per cent.

The property price index can still increase because the prices of the transacted units in Q4 2020 were higher than in the preceding quarter, said Nicholas Mak, ERA Realty's head of research & consultancy.

The median unit price in Q4 2020 was S$1,734 per sq ft, up 3.1 per cent over Q3, said Ms Sun.

Developers' sales in the first week of the new year was brisk, with foreigners picking up some luxury units, said Lee Sze Teck, Huttons Asia research head. Such sales for the week of Jan 4-10 numbered 135, up 15 per cent from the figure in the last week of December, he noted.

The CCR accounted for 14.1 per cent, while the RCR and OCR made up 30.4 per cent and 55.6 per cent, he said.

The top selling projects in the CCR were Nouvel 18 and V on Shenton, followed by Kent Ridge Hill Residences in the RCR and Treasure at Tampines in the OCR.

"Several high-end luxury projects saw foreigners picking up units in the last week, probably an early indication that foreigners' interest may be returning," he said.

Ms Sun noted that permanent residents and business travellers are among the foreigners buying new homes.

Mr Mak said: "We are seeing more buyers visiting show-flats. There are some buyers who are eager to acquire their target units and willing to pay higher prices if necessary. They may believe that the worst of the pandemic is behind us."