Pent-up demand continues to drive new home sales with 1,227 units sold in Singapore in August, an 11-month high with confident buyers pushing prices upwards amid worsening economic conditions and rising unemployment.
The high number of transactions surprised some because it was also the Hungry Ghost month, but it got an extra lift from Forett At Bukit Timah, a freehold development that was launched on Aug 8 – the first private residential project launch since the “circuit breaker” ended on June 1. A total of 212 units have been sold as of Aug 31.
According to URA Realis data, August’s new home sales of 1,227 (excluding executive condominiums, or ECs) is the highest since September’s 2019’s 1,270, said Christine Sun, OrangeTee & Tie, head of research and consultancy.
It is also up 13.6 per cent year-on-year and 9.3 per cent over July’s 1,080. Including ECs, 1,276 units were sold in August.
“Backed by pent-up demand, we had anticipated that August’s new home sales could match the 1,080 units sold in July, or perhaps just moderate slightly given that market activity is typically slower during the Hungry Ghost month (which started on Aug 19),” said Wong Siew Ying, PropNex head of research and content. “Hence, the 1,227 caveats posted in August has surprised on the upside.”
The property market is behaving like the equity market – it seems divorced from the wider economy – as buyers snap up all viewing appointments at sale galleries while thousands of people have lose their jobs.
Singapore’s gross domestic product is expected to shrink 6 per cent this year, according to private sector economists polled by the Monetary Authority of Singapore.
Ministry of Manpower figures showed overall retrenchments – including citizens and non-citizens – of 6,700 in the second quarter and 3,220 in the first quarter.
This was higher than the peak of 5,510 during the 2003 Sars outbreak, but below the 2009 global financial crisis high of 12,760. More job losses are expected to come.
Labour chief Ng Chee Meng last month said he expects job losses to rise in the next six to 12 months as the economic impact of pandemic becomes more widely felt.
“Last month’s new home sales defied gravity amid the pandemic, rising unemployment rate, Hungry Ghost month and cooling measures,” said Ms Sun.
New home sales seem to be driven by domestic demand where Singaporeans formed the bulk of purchasers (84.7 per cent) for the 1,223 new non-landed private homes sold last month, she noted.
For many Singaporeans, residential properties may still be a “safer bet” especially for investors who are looking for stable returns during times of economic uncertainty.
“Properties in Singapore generally have a good track record of yielding attractive capital appreciation over the past 30 years, especially for new projects that are well-located, possess good product attributes and built by renown developers,” said Ms Sun. “The low-interest rates have also provided some support for the property market as the borrowing cost or mortgages are now more affordable for new borrowers.”
Evan Chung, the head of Knight Frank’s property network, said the profile of buyers fit that of mostly “needs-based” purchasers. These include buyers who sold their properties and are now in need of a new home and those getting married in the coming months, or whose weddings have been pushed back due to the pandemic.
“The second factor driving the sentiment on the ground stems from the fear of missing out,” added Mr Chung.
Purchasers deem that the risk of price increases is greater than the risk of price declines for Singapore properties, and that they could possibly miss out on an eventual upswing in asset values that have historically followed after every recession, he noted, pointing out: “As such, sales activity quickly picks up upon word of discounts and promotions by developers.”
Propping up the market again are HDB upgraders who buy in the more affordable city fringe and mass-market segments.
Drilling further into the data, buyers in August went for the more costly homes in the Rest of Central Region (RCR) pushing the share to 49.2 per cent or 604 units.
The OCR (Outside Central Region) accounted for 40.5 per cent or 497 new homes sales (excluding ECs). The expensive Core Central Region made up the remaining 10.3 per cent or 126 homes sold.
RCR’s volume of 49.2 per cent is the highest since September 2019 when RCR formed 58.7 per cent of the total new home sales (excluding ECs).
Buyers are also willing to pay more, as seen by the higher median prices on a per sq foot (psf) basis in August over that of July.
The estimated median unit prices on a psf in August have all increased across the top nine projects when compared with July’s median unit price, with the highest gain of 4.6 per cent at the Daintree Residence.
“Most best-seller projects have seen a gradual upward trend in pricing this year,” said Lam Chern Woon, Edmund Tie senior director, research and consulting.
Added PropNex’s Ms Wong: “Apart from Forett At Bukit Timah, which was launched in August, most of the top 10 best-selling projects in August had higher median transacted psf price compared to their respective median launch price.”
Whistler Grand sold 51 units in August at a median price of S$1,558 psf, up 14.6 per cent from its launch price of S$1,360 psf. It was launched in November 2018.
But two of the top 10 – The Garden Residences and The Woodleigh Residences – saw declines of 5.3 per cent and 5.6 per cent respectively in their median psf. Against July’s psf price, The Garden Residences and The Woodleigh Residences managed a small uptick – up 0.3 per cent and one per cent respectively.