Higher commissions to incentivise property agents may have worked some magic in helping to bolster private property sales numbers in February, which saw 455 homes sold, an increase of 4.4 per cent from January. This was despite the Lunar New Year festive lull and the absence of new launches.
A check with property agents suggested that certain projects such as Affinity at Serangoon, Garden Residences and The Tre Ver are offering average commission rates of over 3 per cent. Generally, commissions for new launches are said to range from 1.6 to 2 per cent.
Christine Sun, head of research and consultancy at OrangeTee & Tie, said: “Many developers have… raised commissions to incentivise agents to boost their selling efforts amidst growing competition for buyers.”
In addition, the prospect of the Cross Island Line could also have lent a boost as a few of the top-selling projects last month are located near upcoming stations.
“Projects in Serangoon continued to ride on the positive buying sentiment arising from the announcement of stations on the Cross Island Line,” said Huttons Asia head of research, Lee Sze Teck. Those that are near the future Serangoon North station include Affinity at Serangoon and The Garden Residences.
The private home sales figures from the Urban Redevelopment Authority (URA) – which exclude executive condominium (EC) units – also showed that sales were higher year on year by 18.5 per cent, partly due to more units being launched this year. February’s figures have taken into account lapsed options.
In February, 596 private homes were launched, of which 25 were in the core central region (CCR), 141 in the rest of the central region (RCR) and 430 outside the central region (OCR).
In comparison, 498 units and 201 new homes were launched for sale in January this year and February last year respectively.
Newly released units in February this year were all from projects that had been launched previously, with 250 units from Affinity at Serangoon, 100 units from The Tapestry, 81 units from Artra, 70 units from Riverfront Residences and 50 units from The Tre Ver.
Including ECs, developers found buyers for 457 units last month, up 4.6 per cent from January, but 4 per cent lower from February a year ago.
Chief executive officer of PropNex Realty, Ismail Gafoor, noted that despite the Chinese New Year celebrations and the lack of new launches during the month, the 455 new homes sold “reflects an indication of the presence of inherent demand and resilience, particularly for new projects that have been previously launched.”
There were no new launches in February last year either.
On the other hand, Ku Swee Yong, chief of real estate brokerage International Property Advisor pointed out that while 455 units is a “healthy number” amid the current operating conditions, it is still far off from the market consensus of 9,000-10,000 new sales in total this year.
Meanwhile, Nicholas Mak, executive director of real estate consultancy ZACD Group, highlighted that the number of returned units appears to have decreased and hovered between 67 and 70 units in January and February this year, similar to levels observed before July’s cooling measures were implemented last year. Following the cooling measures, the number of returned units spiked to a monthly average of 185 units for July to December.
He said: “The more moderate number of returned units in January and February 2019 do not appear to be alarming. However, it still indicates that there are some buyers who require more time to complete their home purchases due to the challenging environment created by the recent cooling measures.”
99-year leasehold Affinity at Serangoon was the top-selling project in February with 88 units sold at a median price of S$1,494 per square foot, followed by Riverfront Residences, where 49 units were sold at a median price of S$1,322 psf. Collectively, these two projects accounted for 137 units sold, or about a third of the total number of units. Rounding off the top five were The Tre Ver, Stirling Residences and Parc Botannia.
Going forward, there are expected to be a number of new launches this year, including two major launches taking place this month – namely Treasure at Tampines, which at 2,203 units is the biggest private residential development in Singapore, and the 1,410-unit The Florence Residences in Hougang.
OrangeTee & Tie’s head of research and consultancy, Christine Sun, expects that the sales performance for Treasure at Tampines will be keenly watched since it is expected to be one of the most attractively priced projects to be launched in the current market. “A solid sales number will likely boost the buying sentiment for the entire residential market, paving the way for better sales this year,” she added.
Citing URA data, Ong Teck Hui, senior director of research & consultancy at JLL, said: “There are nearly 36,000 uncompleted as well as completed unsold private residential units as at 4Q2018. This is prompting many developers to try to launch their projects earlier to secure sales before the competition intensifies. Market sentiments could also soften due to the uncertain external environment and slower economic growth.”
With the string of launches lined up this year, buyers are spoilt for choice, said Eugene Lim, key executive officer of ERA Realty Network. “Hence, they are very selective when it comes to buying a unit. Good products with a reasonable price will sell well,” he said, adding that primary market sales could be in the range of 8,000 to 9,000 units for 2019 as a whole.
Meanwhile, against a backdrop of rising mortgage rates, competition will be stiff for developers as they try to attract buyers from the torrent of launches arising from the land acquisition spree in 2017 and first half of 2018, acknowledged Desmond Sim, CBRE’s head of research (Singapore & South-east Asia). He added: “However, with a comfortable leeway to the five-year ABSD deadline, developers may still hold firm with prices, but will incentivise agents or rely on stronger project attributes to attract buyers.”