With fewer launches, new private home sales slump

Private residential property sales slumped again in June after a burst of activity in the previous month, with developers scaling back new launches in the expectation that the school holidays and the World Cup would further sideline potential buyers in an already cautious market.

Sales of new private homes plunged 68 per cent from May’s 1,488 units to 482 homes, data released by the Urban Redevelopment Authority (URA) showed yesterday. This came as developers launched only 418 homes last month, compared with 1,819 units in May.

Last month’s showing was a reversion to the sort of results seen in the first part of the year, which saw an average of 638 units sold each month between January and April.

Analysts said the figures showed that developers are calibrating launches to ensure units do not flood into the market when buyers remain cautious.

“Having released a handful of well-received projects in May … developers focused on moving units in previously-launched developments and generally avoided releasing new projects amid the June school holidays and World Cup season,” said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

There were only two new project launches last month: Trilive at Tampines Road, which sold 19 out of the 80 newly-offered homes at a median of S$1,605 per square foot (psf), and The Crest at Prince Charles Crescent, which moved 35 out of the 132 debuting units at a median of S$1,682 psf.

However, there was stronger demand at two previously-launched developments, which led the sales league table for the month.

The 944-unit Coco Palms at Pasir Ris Grove released another 100 homes for sale and sold 55 of them at a median price of S$1,014 psf, making it the best-selling development. The Panorama at Ang Mo Kio, which was re-launched in May at a lower price, came in second by moving 49 condominiums at a median of S$1,287 psf even though no new units were offered last month.

These two projects helped the Outside Central Region (OCR) to remain the most active with 269 sales. The Rest of Central Region (RCR) recorded 167 transactions while the Core Central Region (CCR) remained fairly muted with only 46 homes sold.

Besides school holidays and the World Cup keeping buyers on the sidelines, sentiment continued to be affected by the various government measures which have hit sales and prices, noted Jones Lang LaSalle’s national director of research and consultancy, Mr Ong Teck Hui.

“The fundamental weakness in demand due to the Total Debt Servicing Ratio (TDSR) framework and other cooling measures prevents any market pick up from being sustained. After TDSR, there is just not enough demand to continually soak up unsold units, so we are seeing sales progress slowing significantly or even stalling completely after the initial launch,” he said.

The latest set of figures by URA brought total new homes sold by developers to around 4,500 units in the first half of this year, 56 per cent lower than the same period in 2013.

Analysts said the cautious sentiment is expected to persist in the coming months.

“With the traditional lull period over, launch activity is expected to pick up slightly. However, with fewer affordably-priced mass market projects in the pipeline, buying volume is not expected to improve extensively. Furthermore, the slowdown in buying momentum — even for popular projects — indicates that buyers continue to face inertia to commit,” Ms Chia said.

Mr Nicholas Mak, executive director at SLP International Property Consultants, said there is a growing possibility that annual sales may fall below 11,000 units as the property curbs are expected to stay in place at a time when the local economy is only growing moderately.

“If this happens, it would be the lowest volume since the financial crisis of 2008, when developers sold only 4,264 private homes.”

Source : Today – 16 Jul 2014

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