Singapore's new private home sales down 26% in Oct-Dec from previous quarter

Fiona Lam
Published Fri, Jan 22, 2021 · 09:16 AM

PROPERTY developers in Singapore sold 2,603 new private homes in the fourth quarter last year, about 26 per cent lower than the 3,517 units sold in the previous quarter, though prices increased at a greater pace.

Despite the quarter-on-quarter drop, the latest figure was the best performance for the October-December period since 2012, when 4,353 units were sold in the primary market, said ERA. Before the pandemic, the months of November and December were typically a lull period in real estate as people went on vacations.

Year on year, Q4's transaction volume was up 6.5 per cent. CBRE's South-east Asia research head Desmond Sim noted the renewed positive sentiment in the property market, boosted by the healthy take-up rate of newly launched, well-located and relatively affordable projects, as well as low interest rates strengthening investors' purchasing power.

The full-year tally for developers' new home sales stood at 9,982 units for 2020, inching up from 9,912 units in 2019.

These final figures - released by the Urban Redevelopment Authority (URA) on Friday - exclude executive condominium (EC) units, which are a public-private housing hybrid.

Christine Sun, OrangeTee & Tie’s head of research and analytics, described last year’s private home demand as “surprisingly vibrant”, against the backdrop of Covid-19 lockdowns and strict travel restrictions.

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On the EC front, developers made fewer sales in the fourth quarter (133 units) than in the third quarter (164 units) last year, and did not launch any new EC units for sale in both quarters.

For the whole of 2020, developers sold 958 EC units, almost double the 505 sold in the year prior.

Developers launched 1,044 EC units for sale last year, 27.3 per cent more than the 820 units launched in 2019.

Meanwhile, overall prices of both landed and non-landed private residential properties rose 2.1 per cent during the October-December period, a bigger increase than when prices edged up 0.8 per cent in the previous quarter. PropNex’s head of research and content, Wong Siew Ying, said the latest price growth marked the steepest quarterly increase since the 3.4 per cent gain in Q2 2018.

This was mainly driven by non-landed properties located in the rest of central region (RCR) and core central region (CCR).

Prices of non-landed homes in the RCR or city fringe sped up their uptrend, rising by 4.4 per cent after the 2.5 per cent increase in the July-September period. Ms Wong noted that new launches such as The Linq At Beauty World and The Landmark helped prop up prices in the area.

In the CCR, these upmarket non-landed homes’ prices climbed 3.2 per cent in Q4, reversing the 3.8 per cent decline in Q3. This was likely supported by higher median prices at several previously launched projects, Ms Wong said.

Non-landed homes in the outside central region (OCR) or suburbs registered a 1.8 per cent increase in prices, slightly faster than the 1.7 per cent gain in the previous quarter. Clavon and Ki Residences At Brookvale, both launched in December, helped to spur this mass-market region’s price growth, Ms Wong noted. Median prices in Q4 were S$1,637 per square foot (psf) at Clavon and S$1,766 psf at Ki Residences, higher than the OCR median price of S$1,632 psf.

Ms Sun said the overall uptrend was expected, as many projects including Fourth Avenue Residences, Kopar at Newton and The M revised their selling prices upwards last quarter.

For the whole of last year, non-landed homes' overall prices grew 2.5 per cent, faster than the 1.9 per cent rise in 2019. (see amendment note)

Meanwhile, landed homes became cheaper on average in the fourth quarter, with prices falling by 1.6 per cent versus the 3.7 per cent increase in the quarter prior. For 2020, landed properties' prices rose by 1.2 per cent.

ERA head of research and consultancy Nicholas Mak said that when the total debt servicing ratio was introduced in June 2013, private housing prices contracted from Q3 2013 to Q2 2017 - one of the longest periods of price weakness since 1975. But in Q4 2020, the price index "finally recovered to the level that was slightly higher than the 2013 peak".

In other words, it took more than seven years for private home prices to recoup the losses brought about by government intervention, Mr Mak wrote.

DEPLETING STOCK

Supply in the pipeline - that is, new development or redevelopment projects with planning approvals - continued to dwindle.

Uncompleted private residential units, excluding ECs, in the pipeline totalled 49,307 at end-December, shrinking from the 50,369 units as at end-September. Of these, 24,296 units remained unsold as at end-December, down from the 26,483 unsold in the previous quarter.

In EC projects, 3,476 units were in the pipeline, of which 2,130 remained unsold by the end of last year.

That means there is a total of 26,426 units, including ECs, with planning approvals that were still unsold at end-December, declining from 28,727 in the previous quarter and 32,272 a year ago.

Ms Sun wrote that this year, the market may swing back in favour of sellers as housing stock is depleting amid robust demand and a drastic decline in land sales in recent years. “The oversupply risk of our private residential market may be easing soon”, she said.

On the slate of launches this year, CBRE's Mr Sim said that these upcoming projects' locations in CCR and RCR may limit their buyer pool and thus slightly lower the overall volume of new private home sales for 2021 to about 8,000-9,000 units.

Aside from the unsold units with planning approval, there is also a potential supply of some 4,700 units including ECs from government land sales (GLS) sites that have not been granted planning approval yet, URA said.

The authority added that the Singapore government will continue to monitor economic and property market conditions “closely” and adjust the supply of future GLS programmes where necessary, to ensure it remains adequate in meeting demand.

Earlier this week, Deputy Prime Minister Heng Swee Keat said the government is paying “close attention” to the local real estate market “to ensure that it remains stable”. “We do not want to see the property market run ahead of the underlying economic fundamentals”.

Amendment note: An earlier version of this article incorrectly stated that prices of non-landed homes in 2020 grew 2.2 per cent, slower than the 2.7 per cent rise in 2019. They in fact grew 2.5 per cent in 2020, faster than the 1.9 per cent rise in the previous year.

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