Private home sales to remain robust

The scorching pace of new private home sales continued unabated for the second consecutive month in March, when developers sold a total of 2,393 units, down marginally from February’s 2,417.

Sales have not only returned to the levels before the additional buyer’s stamp duty (ABSD) was announced last December, as one analyst put it. Instead, it would be more accurate to say they have risen several notches higher – in my own estimate, 20 to 25 per cent more than last year’s levels.

The latest data brought total sales for the first quarter to a whopping 6,682 units. This is not only a record for a quarter but has even exceeded the total for some years – one as recent as 2008.

Many have commented that the robust sales have been mainly supply-driven, noting that developers launched a record 6,982 homes in the quarter. Actually, “liquidity-driven” would have been a more appropriate description, to put the spotlight on the real reason – historically low borrowing costs – and not project launches in themselves.

Will housing sales in the coming months continue at this pace? Actually, it is not a question of whether they can. They have to – or at least at a pace not too far from the one we are witnessing at the moment.

If not, how will the market clear the increased supply that developers are planning for, even as they continue to bid and search for sites? I would begin to worry for developers if sales revert to last year’s levels. Although not yet a big problem, unsold inventory is creeping up.

For now, even the high end of the housing market seemed to have caught some of the enthusiasm in the broader market. Almost twice as many homes in the above-$2,000 psf range were sold last month compared to February. Although the nationalities of the buyers have not been disclosed, I am quite sure that not a few are foreigners.

The Inland Revenue Authority of Singapore recently disclosed it had collected about S$110 million in additional buyer’s stamp duty between Dec 8 last year – when the ABSD took effect – and March 31 this year.

Of this amount, 65 per cent was paid by foreigners and non-individuals.

I worked back some of these numbers and found that the 1,072 properties bought by Singaporeans and PRs – on which 3-per-cent ABSD is paid – cost them an average of S$1.2 million each, excluding the ABSD.

On the other hand, the 369 properties bought by foreigners – on which 10-per-cent ABSD is paid – cost them an average of S$1.79 million.

For non-individuals such as corporates, the 37 properties bought cost an average of $1.46 million, excluding the 10-per-cent ABSD.

So, it would appear that foreign buyers have been discouraged but not entirely deterred.

Such statistics must gladden the hearts of high-end niche players such as SC Global, which this week unveiled its latest luxury project, Sculptura Ardmore, on the highest point of the exclusive Ardmore Park neighbourhood. For it re-affirms – to those who are still not convinced – that price is secondary to the product where this market segment is concerned.

That SC Global has chosen to launch its project now may signal that there is no better time to once again promote such high-end properties. Developers are the best readers of market sentiment. They will not launch if they are not assured of sales and they will not bid for sites if sales are going to grind to a halt.

What nobody can predict is when the next set of cooling measures, if any, will be announced.

Meanwhile, the eagerly anticipated launch of Sky Habitat in Bishan, dubbed Singapore’s priciest suburban condo, has taken place.

When I first read of the expected pricing of between S$1,600-S$1,700 psf, I had my reservations on whether the market will bite. This is because the developers – to their credit – were not exactly churning out shoebox units.

Judging by the reports put out by the equity analysts from the banks on Monday, the sales and estimated achieved prices did not exactly match expectations that the pre-launch hype had created. For me, though, I thought the launch performed creditably. I heard that the larger apartments actually sold better than the smaller ones – untypical of recent suburban launches.

So what made buyers pay more for larger apartments?

In the past, sales agents at project launches sold buyers the property and its location. Then they included lifestyle and proximity to popular schools. Today, it appears they are selling views just as hard.

The balconies, private terraces and three sky bridges at Sky Habitat all help accentuate the views for residents. If you do not have a private terrace, just go to the sky bridges. It helps that the project is surrounded mainly by low-lying developments.

The Pinnacle@Duxton comes to mind when it comes to selling views. If you cannot provide a good view for all occupants, there is the always the sky deck open to all residents. The sky bridges at Sky Habitat serve the same purpose for units which have less than spectacular views.

What, I wonder, will they sell next?

By Colin Tan – head, research and consultancy, at Chesterton Suntec International.

Source : Today – 20 Apr 2012

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