Private home sales down 19% in October, but outlook healthy

Sales of new private homes slowed last month after two consecutive months of increases, but analysts attributed the decline mainly to fewer launches and said that projects with good locations and prices will continue to draw buyers.

Developers sold 1,009 units last month excluding executive condominiums, down 19 per cent from September’s 1,246 units, after they launched 38 per cent fewer homes at 1,124 units, Urban Redevelopment Authority data showed yesterday.

Despite the falling sales volume, overall median prices rose from the previous month, with those in the Central Core Region, Rest of Central Region and Outside Central Region advancing 2.8 per cent, 2.1 per cent and 1 per cent to S$2,286, S$1,570 and S$1,280 per sq ft, respectively, property firm OrangeTee noted.

“The October data show that sales have normalised and buyers have become more discerning when it comes to property purchases. As potential home buyers go for bargains in today’s market, anything that’s launched with perceived value for money will be a draw,” said OrangeTee Head of Research and Consultancy Christine Li.

Indeed, the new launches that were competitively priced did well in October. At Inflora condominium in Flora Drive, 388 out of the 396 units launched were sold at a median price of S$952 psf, while at Nine Residences in Yishun, 96 out of 186 units were sold at a median S$1,107 psf.

Chief Executive of PropNex Realty, Mr Mohamed Ismail Gafoor, said: “We believe both developers and home buyers have come to terms with the government curbs on property loans … Some developers have responded by fine-tuning selling prices.”

Mr Ismail was referring to the total debt servicing ratio (TDSR) framework, which requires financial institutions approving housing loans to ensure that a borrower’s total debt obligation is not pushed above 60 per cent of his or her gross monthly income. This indirectly limits the size of housing loan one can take and has shifted buying interest to units sold at lower absolute prices.

Last month, the OCR continued to be the area that sold the most new private homes at 716 units. The RCR and CCR saw 212 and 81 units sold, respectively, according to the URA data.

“New homes in the RCR and OCR contributed over 90 per cent of sales in the month due to their larger projects with more units available for sale and their more budget-friendly launch prices compared to the other region,” said Mr Ismail.

Mr Alan Cheong, Senior Director of Research and Consultancy at property firm Savills, noted that besides the new launches, projects that were launched earlier also continued to book “decent” sales.

“These numbers are beginning to shape the post-TDSR sales profile that developers who still have unsold stock may see an average sales rate of one unit every two days or so till (they achieve) temporary occupation permit,” he said.

Analysts said underlying demand for private homes remained strong and monthly sales would continue to be healthy, maintaining above 1,000 units in the coming months. This month’s sales volume would likely rise due to the keen interest in projects like Alex Residences and Duo Residences launched this week.

“The underlying support for the market will be further affirmed when November sales numbers are revealed, for we will see the performance put up by Duo Residences and Alex Residences,” Mr Cheong said.

Source : Today – 16 Nov 2013

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