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SINGAPORE: Sales of new private homes last month fell 58 percent since March as a result of “circuit breaker” restrictions, and analysts expect the housing market to remain muted in May.
Data released by the Urban Redevelopment Authority (URA) on Friday (May 15) showed that developers sold 277 units, excluding executive condominiums (CE), last month, compared to 660 units sold in March.
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Including the EC, 293 units were sold in April, representing a 67.6 percent drop from March.
These are the lowest monthly sales since December 2014, said Christine Sun, head of research and consulting at OrangeTee.
On an annual basis, developer sales decreased 62.4 percent from 737 units, excluding CE, which were held in April 2019.
In total, developers launched 640 private homes in April, a 10.7 percent jump from the previous month. No EC projects were launched in April.
READ: New home sales in Singapore drop 12% in Q1 as prices drop
Overall, in April, 102 units were sold in the Central Central Region (CCR). A total of 77 and 98 units were sold in the rest of the central region (RCR) and outside the central region (OCR), respectively.
The most popular private development in April was Kopar in Newton with 83 units moved, followed by Treasure in Tampines and Riverfront Residences in Hougang with 28 and 17 units sold, respectively.
“LACKLUSTER”, STILL “COMPLETELY REMARKABLE”: ANALYSTS
The fall in April reflected cautious purchases during the COVID-19 pandemic and was expected, analyst Ong Kah Seng said.
“These lackluster sales were within expectations as the April collapse abruptly suspended all real estate activities beginning in April, including showflats operations that are essential activities for property development, which traditionally significantly support sales transactions “said Mr. Ong.
Circuit breaker measures introduced by authorities in April to stem the spread of the coronavirus in Singapore allowed only essential services, such as healthcare, transportation, logistics, and food and beverages (F&B), to continue.
Ong said the announcement of the circuit breaker extension through June 1 “dashed hopes of a speedy recovery and further reduced economic and ownership sentiments.”
However, the low number for April “is still not as low as a few months in 2008/09, which recorded new home sales below 200 units due to the global financial crisis,” said Mr. Ong Teck Hui, senior director of research and consulting at JLL
Furthermore, it was “quite remarkable that some new super luxury and luxury homes” were sold during the switch period, Ms. Sun noted.
The highest-priced private house made last month was a 477-square-meter super luxury condo on 15 Holland Hill for S $ 13.8 million or S $ 2,692 psf on April 2, Ms. Sun said.
Several luxury units also continued to move projects even after the switch measures were implemented on April 7. This included two super luxury condos on Boulevard 88 that sold for S $ 10.3 million each, Ms. Sun said.
“This may indicate that despite the pandemic, many wealthy and ultra wealthy continue to see Singapore as an attractive investment destination and a safe haven to park their funds,” he added.
PERSPECTIVE OF THE FUTURE
Property analyst Mr. Ong suggested that developers could use the downtime to gather as many non-binding expressions of interest from genuinely interested buyers as possible.
He noted that construction delays would increasingly lead buyers to buy properties in complete private residential projects with unsold units.
“Completed projects will shine in sales starting in 2020, as developer sales of construction projects (which are the bulk of developer sales) face tremendous pressure from site suspension.”
However, before the sales selection, more pain can be expected.
JLL’s Mr. Ong added that private new home sales are expected to be even lower in May as the circuit breaker was in place throughout the month.
“If the circuit breaker is raised in June and the activity of the exhibitions resumes, we can expect sales performance to improve as there are still buyers in the market,” he said.
“However, the mood is likely to be cautious and buyers more price sensitive, focusing on projects considered attractive pricing.
“Even when the showflats reopen, the ongoing recession and uncertainties due to COVID-19 will continue to weigh on demand for private homes,” said Mr. Ong of JLL.
Ms. Christine Li, head of research at Cushman and Wakefield, similarly observed that June, a month not traditionally known for its home sales, could provide some relief for developers.
“When the (circuit breaker) ends in early June, the showroom display should increase in full force and sales activities would increase as a result,” he said.
“In the past, June was not ideal for launching new projects because it is the traditional school holidays and parents used to travel with their children. But this year, the school will resume in June and parents will not be traveling for pleasure this June because to COVID-19 “.
For all of 2020, the new home sales volume forecast is expected to fall between 4,000 and 5,000 units (excluding the EC), said Desmond Sim, head of research, Southeast Asia at CBRE.
“Overall interruptions of the extended circuit breaker, where sales galleries must close, the ban on foreign visitors to Singapore, and the slowdown in project launches are expected to have a negative impact on sales volume in the future, “he added.
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