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SINGAPORE – Sales of new private homes by developers more than halved in October from the previous month, curbing a five-month buying spree after new restrictions were placed on the reissue of purchase options (OTP).
Buyers purchased just 642 units in October, down 51.7 percent from a more than two-year high of 1,329 units in September, according to figures from the Urban Redevelopment Authority (URA) on Monday (Nov. 16).
Year-over-year, private home sales fell 31.1 percent from 932 units in October last year.
The URA figures for Monday (Nov. 16) exclude executive condominium (EC) units, which are a hybrid of public-private housing.
New rules imposed on September 28 by the URA restricted developers from reissuing OTPs to the same buyer of the same unit within 12 months of the expiration of the previous OTP.
They are also restricted from providing buyers with advance agreements to reissue OTPs.
The move is aimed at curbing a real estate market practice that is believed to have inflated private home sales figures, while also encouraging financial prudence in home purchases amid a Covid-19 economic recession and climate uncertain employment.
OTP reissue refers to an agreement that some private home buyers make with a developer, through a real estate agent, to continuously reissue OTPs upon expiration, without the reservation fee being lost.
In the past, this could be done for up to a year, or even up to 18 months, from the date of the first OTP. The idea was to give the buyer time, for example, to sell their existing home.
The drop in sales could also be attributed to the sharp drop in new units available to reserve.
The number of new private residential units launched fell 68.4 percent to 423 in October, down from 1,340 in September. This was even lower than the number of units released during the circuit breaker months of April (640 units) and May (615 units), and was the lowest since December last year. Last month, only one new project was launched: the 319-unit Hyll in the Netherlands.
Huttons Asia research director Lee Sze Teck said buyers had waited last month to see if developers would adjust their prices.
“This group of buyers belongs to those who do not need a call option extension but who nevertheless held their purchase to watch. The developers, on the other hand, had no plans for major releases in October,” Lee said.
He noted that The Linq @ Beauty World sold more than 96 percent of its units on the first day of its launch over the past weekend. “The sales were made on all types of units and further demonstrated that there are many buyers in the market that do not require option reissue.”
The best-selling project last month was The Garden Residences in Serangoon North, which traded in 53 units at a median price of $ 1,612 psf, according to research from Huttons Asia.
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