Sluggish new year for developers as new private home sales fall 18% in January

Sluggish new year for developers as new private home sales fall 18% in January

Sales of private homes by developers in Singapore got off to a slow start in 2019, in part due to fewer buyers over the festive period.

Developers sold 433 units in January, down 17.8 per cent from the 527 homes sold the same time last year, Urban Redevelopment Authority (URA) data showed on Friday (Feb 15).

January’s sales were also 28 per cent lower than the 602 units sold in December, excluding Executive Condominiums (ECs).

This signals a “very different” mood from January last year when sentiments were more positive, noted Mr Desmond Sim, head of research for Singapore and Southeast Asia at real estate company CBRE.

He also said that sales could continue to remain tepid amid slower economic growth and heightened risks at home and abroad.
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NEW PROJECTS WERE ALL IN CORE CENTRAL REGION, LIMITING SALES: ANALYSTS

Developers launched 498 new homes and three new projects – Fourth Avenue Residences, Fyve Derbyshire and RV Altitude – in January.

The three new launches were all in the Core Central Region (CCR), noted analysts, who also suggested that January sales could have been limited by the lack of offerings in the Rest of Central Region (RCR) and Outside Central Region (OCR).

“Sales volume is usually higher when large-scale projects are launched in the OCR and RCR since prices tend to be lower (compared to luxury homes) and more buyers can afford these homes,” said Ms Christine Sun, head of research and consultancy at OrangeTee.

“There is also a longer holiday period during the Lunar New Year where many potential buyers could have travelled overseas during the long weekend. As a result, many developers may have pushed back their launches to avoid breaking the sales momentum since sales are usually slower during the festive season,” she added.

Fourth Avenue Residences sold 74 out of its 164 units at a median price of S$2,412 psf, while Fyve Derbyshire moved 11 units at a median S$2,382 and RV Altitude sold 19 units at a median S$2,858.

“The fact that three prime district projects were launched in January reflects confidence on the part of their developers in launching units in the upper price segment where the pool of buyers is more limited,” noted Mr Ong Teck Hui, senior director of research and consultancy at JLL.

“The stable market in January could be a prelude to healthy launches and sales in the coming months,” he added.

Similarly, Ms Sun also said that healthy demand for these new luxury homes indicate that buyers are generally still upbeat about the market given that “household incomes have risen across the board last year and our gross domestic product (GDP) is still positive”.

“The healthy demand for these new luxury homes bodes well for the luxury market as more than 4,000 new homes could be launch-ready this year,” she said.

In the other segments, Affinity at Serangoon continued to sell well, following the announcement of the first phase of the Cross Island Line, said JLL’s Mr Ong.

He said that projects with “strong attributes”, such as proximity to an MRT station, can still attract buyers, provided they have realistic pricing.

He pointed to two other projects that performed well in January, Parc Esta (32 units sold) and Stirling Residences (22 units sold), which are located near Eunos MRT station and Queenstown MRT station, respectively.

MANY NEW PROJECTS IN THE PIPELINE

The analysts said that moving forward, they expect new home sales to rise on the back of a full bag of new projects.

Among the upcoming launches are Florence Residences, a 1,140-unit development in Hougang, and Treasure @ Tampines, which will offer 2,203 homes.

“For 2019, the demand for new homes will be driven by supply,” said Mr Eugene Lim, key executive officer at ERA Realty Network.

“(It) will be a busy year for buyers, developers and agents alike.”

Source: Channel NewsAsia – 15 Feb 2019

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