New private home sales up 3.5% in January as primary market shows resilience amid few launches

Lisa Kriwangko

Published Tue, Feb 15, 2022 · 05:26 AM

NEW private home sales were stable in January despite fewer launches during the month, latest data from the Urban Redevelopment Authority shows. Developers in Singapore sold 673 new private homes in January, inching upwards by 3.5 per cent from 650 in December, when new cooling measures kicked in. The January tally is the highest private home sales for the month of January since 2014, with the exception of January 2021, noted Wong Siew Ying, head of research and content at Propnex Realty.

Including executive condominiums (ECs), which are a public-private housing hybrid, sales reached 725, just 0.8 per cent higher than that of December 2021.

Tuesday's data from the URA higher than consultants' early flash estimates published by The Business Times on Thursday (Feb 10).

Wong said: "January's sales have remained steady and the performance is quite encouraging, considering the limited new projects being launched, the seasonal lull leading up to the Lunar New Year, as well as fresh property curbs having been introduced in December. So, on balance, we think the 673-unit sales figure last month is still pretty respectable."

Year on year, last month's new home sales is 58.8 per cent lower than the 1,633 units sold in January 2021. That said, last year's volume was boosted by a number of mega launches. In contrast, the number of units launched for sale in January 2022 is the lowest since February 2021's 167 units, noted Nicholas Mak, ERA Realty's head of research and consultancy.

Fewer units launched

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Last month saw 178 units launched, of which 127 were in the outside of central region (OCR), accompanied by a subdued 29 units and 22 units launched in the rest of central region (RCR) and core central region (CCR) respectively.

New projects launched include Belgravia Ace, which put 85 of its 107 strata landed housing units up for sale, and Ikigai with 16 boutique units.

Belgravia Ace moved 77 homes during the month at an average price of S$4.4 million or S$1,080 per square foot (psf), making it the second best-selling project in January after Normanton Park, where 94 units were sold at a median price of S$1,841 psf.

According to Leonard Tay, head of research at Knight Frank Singapore, this is "a subtle testimony to the underlying strength of the private residential market".

"Projects with popular selling points and locational attributes, will still move sales in an impressive fashion as there remain many genuine homebuyers purchasing for their own occupancy," he noted.

Tay added that the stock of landed properties in Singapore has stagnated at over 73,000 units in the last four years and is not expected to grow substantially in future.

He said: "Landed homes in Singapore have been one of the top-performing asset classes in the real estate market, surpassing sales performances over the last decade. And while there is no such thing as a 'sure thing' in the realm of real estate investment, in land-scarce, high-rise Singapore, landed homes are as close as anyone can come to a sure thing."

Lee Sze Teck, senior research director at Huttons Asia, added: "The launch of Belgravia Ace in January 2022 pushed the proportion of purchases priced at S$2 million and above to 50.5 per cent."

Last month, most of the sales excluding EC were in the RCR (42.9 per cent), followed by the CCR (40.9 per cent) and OCR (16.2 per cent).

Impact of cooling measures

January's performance also suggests that demand for new private homes has not been severely hit by the new cooling measures, Wong noted.

"Previous rounds of cooling measures seemed to have a greater impact on the new sale market," said Christine Sun, OrangeTee & Tie senior vice-president of research and analytics.

She noted that after the implementation of new Additional Buyer's Stamp Duty (ABSD) measures in January 2013, sales volume excluding ECs dropped by 64.9 per cent month-on-month and 70.5 per cent year-on-year to 712 units in February 2013.

"Likewise, new home sales excluding ECs plunged 64.2 per cent from 1,724 units in July 2018 to 617 units in August 2018 after new cooling measures took effect on Jul 6, 2018. Comparatively, sales volume rose 3.5 per cent from 650 units in December 2021 to 673 units in January 2022," Sun added.

Tay also noted that the majority of buyers in 2022 will comprise new families and owner-occupiers looking to upgrade or right-size. These households who own only 1 property at any one time will generally be unaffected by the ABSD revisions, he said.

"Buyers purchasing second and subsequent properties for investment purposes and for recurring rental income will likely adopt a wait-and-see approach in the months ahead, with the expectation that prices will ease," he said.

Market outlook

The 32-unit freehold Royal Hallmark along Haig Lane will be the only launch in February 2022, Huttons' Lee noted. He expects the project to generate "good interest" from buyers as demand for larger homes have increased since the pandemic, adding that the project is priced "attractively" from over S$1,700 psf.

While the latest new home sales data points to some degree of market resilience, Ong Teck Hui, senior director of research & consultancy at JLL noted that "an examination of resales data in URA Realis shows a 43.2 per cent drop in transactions of private homes, from December 2021 to January 2022, based on caveats lodged". "The cooling measures has led to a stand-off between buyers and sellers, due to a mismatch in price expectations which dampens transaction volume," he said.

Looking ahead, Tricia Song, head of research, South-east Asia at CBRE expects new sales in February 2022 to regain momentum after the Chinese New Year period. "For the non-landed segment, Q1 2022 could see the launch of several small mass-market projects that were originally acquired through the private market, such as Kovan Jewel (34 units) and The Arden (105 units). Correspondingly, the EC segment could see the launch of North Gaia (617 units), the project on the Yishun Avenue 9 GLS site," she said.

With the launch pipeline likely to be clamped by caution, CBRE Research expects new home sales to trend down from 13,000+ units recorded in 2021, to 9,000-10,000 units, while prices could be flat to up 3 per cent in 2022. "Due to the larger impact of the cooling measures on investors and foreigners, the volume and prices in the CCR market might be more affected," Ms Song said. "Nonetheless, prices are unlikely to collapse due to strong economic fundamentals, a record low unsold inventory (14,333 units as of Q4 2021) and high occupancies."

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