Singapore new private home sales slump 22.5% in February under 'quadruple whammy'

NEW private home sales slumped in February under a “quadruple whammy” from the Chinese New Year lull period, a declining housing supply, cooling measures and global uncertainties from the Russia-Ukraine war. 

Developers in Singapore sold 527 new private homes in February, down 22.5 per cent from January's 680 units, data from the Urban Redevelopment Authority (URA) showed on Tuesday (Mar 15).  The figures are also 18.3 per cent lower than the 645 new private homes sold in February 2021.

Last month’s volume was the lowest since 487 units were sold in May 2020 during the Circuit Breaker period.

Including executive condominiums (ECs), which are a public-private housing hybrid, 559 units moved last month, down 23.6 per cent from January.

The drop also came despite developers placing 194 units (excluding ECs) for sale on the market, 9 per cent more than the 178 units in January and 16.2 per cent higher than February 2021’s 167 units.

According to OrangeTee & Tie senior vice-president of research and analytics Christine Sun, demand has outstripped supply over the past year, and new home sales exceeded units launched each month. This led to a steady decline in the number of launched but unsold units.

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“The launched but unsold units excluding EC dipped 47.0 per cent from 6,819 units in February 2021 to 3,611 units in February 2022,” she noted.

Last month's only new project launch was the 32-unit Royal Hallmark, a freehold boutique development in District 15 which sold 10 units at a median price of S$1,905 per square foot (psf) during its launch on Feb 26.

Sun also expects the supply to worsen this year as the number of new homes slated for launch is expected to drop further by about 20 per cent to around 9,000 units (including EC) for the whole year 2022. 

She said: “While more land parcels would be released from the Government Land Sales (GLS) programme in the first half of this year, the new homes will only enter the market next year.”

Sun added that as housing demand is often driven by market sentiment, some buyers may have taken a backseat in the light of the growing global uncertainties. The Russian-Ukraine conflict has impacted businesses worldwide, affecting oil, natural gas and stock prices. 

That said, she also noted that escalating tension could lead to a revival in demand for “safe-haven purchases”.

“Looming uncertainties may instead benefit our real estate market as investors shift their focus back to defensive asset classes like properties,” Sun said.

Lee Sze Teck, added that such uncertainties could turn investors to “safe havens like Singapore”. He noted that the number of purchases by foreigners in the past 2 months have trended higher compared to Dec 2021 when the cooling measures were imposed. 

Overall, 79.1 per cent of purchases last month were made by Singaporeans, with PRs and foreigners making up 15.8 per cent and 4.9 per cent respectively.

Tuesday's data was higher than consultants' estimated 490 units published by The Business Times on Mar 9.

Last month, most of the sales excluding ECs were in the Rest of Central Region (RCR) (226 units), followed by the Outside of Central Region (OCR) (160 units) and Core Central Region (CCR) (101 units).

“One positive takeaway from February sales was that the proportion of transactions S$2 million and above in February stayed at the same level before the cooling measures. This means that affordability remained unchanged despite the cooling measures as there remains ample liquidity in the market,” Lee said.

As much as 39.2 per cent of last month’s transactions were priced above S$2 million. Another 35.6 per cent were priced between S$1.5 million to 2 million, while 25.3 per cent of February’s new home sales were priced below S$1.5 million, he noted.

Nicholas Mak, ERA Realty's head of research and consultancy added that there could be increased demand for private housing in 2022 as an estimated record 35,000 HDB flats will reach the end of their Minimum Occupation Period this year.

“By comparison, an annual average of 8,500 HDB flats reached the end of their MOP in the 10-year period from 2009 to 2018 before the deluge of such MOP HDB flats in 2019 to 2022, he said.”

Starting from Tuesday (Mar 15), capacity limits on show flats have been eased to 1,000 persons including salespersons, developer’s staff and agents, at any one time, according to the latest multi-ministry taskforce (MTF) announcements.

“However, should there be more than 1,000 persons at any one time, the capacity limit should be based on 10 square metres per person for the show gallery,” URA said.

Otherwise, while safe-distancing is encouraged, it will no longer be required between masked individuals and groups, URA noted.

Analysts said that while recently eased showflat restrictions are a “welcome move”, there are “more significant” factors such as those listed earlier that affect market sentiment and transactions.