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SINGAPORE: Sales of new private homes in Singapore plummeted more than 50 percent in October amid a shortage of new projects and restrictions on reissue of purchase options (OTP).
Private developers sold 642 units, excluding executive condos (EC), in October, data from the Urban Redevelopment Authority (URA) showed on Monday (November 16).
This is 51.7 percent down from September’s more than two-year high of 1,329 units, and also a 31.1 percent decrease compared to the same month last year, when developers sold 932 homes.
Most of the units sold last month (292) were in the Outer Central Region (OCR), ahead of 283 in the rest of the Central Region (RCR) and 67 in the Central Central Region (CCR).
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NEW RESTRICTIONS, LACK OF THROWS
Christine Sun, head of research and consulting at OrangeTee & Tie, noted that the numbers marked the first drop in sales after five consecutive months of growth, citing two factors as likely causes of the decline: New restrictions on reissuing of purchase options (OTP) and lack of launches.
“The new restrictions on the reissue of call options (OTP) appeared to have affected the market, as sales figures fell more than 50 percent last month,” Ms. Sun said.
The new restrictions were implemented by the URA in September “to instill greater financial discipline” and ensure that “buyers commit to purchase a property only when they are ready to exercise OTP within the validity period,” Ms. Sun explained.
Under the new rules, developers cannot reissue an OTP to the same buyer for the same unit within 12 months of the expiration of the previous OTP.
An OTP expires three weeks after the sale and purchase contract and copies of the title deeds are provided to the potential buyer.
“Some buyers may now need more time to gather their finances, first selling their existing property, as in the case of the HDB improvers, before committing to a private property purchase,” said Ismail Gafoor, CEO of PropNex Realty .
“We believe this interruption in the OTP reissue has temporarily slowed steadily increasing new home sales, but let’s give it some time and we believe the market will readjust and pick up its pace,” he added.
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LACK OF NEW PROJECTS IN OCTOBER
There was only one new launch in October: the 319-unit Hyll in the Netherlands. In total, developers released 423 units last month, less than the number of homes released during the “breaker” period, Ms. Sun noted.
Lee Sze Teck, research director at Huttons Asia, noted that the number of launches was “the lowest in 2020 and the lowest since December 2019.”
With this in mind, Ismail called the October figures a “credible performance.”
“The fall in sales in October was within our expectations. To put things in perspective, we note that the impressive September sales were driven in part by new releases, including Penrose, Verdale and Myra, but there were limited new releases in October, ”he said.
“Therefore, we believe that the sales count of 642 units last month is still considered a credible performance; it is a sign of continued confidence in the real estate market and reflects a relatively healthy underlying demand for homes.”
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ON SINGLE DAY, IS PHASE 3 INCREASED?
Lee said that private home sales may improve in November due to promotions and new releases.
“The developers rolled out 11/11 promotions in November in conjunction with the biggest shopping event, Singles Day,” he said. “Promotions of more than S $ 500,000 were offered for select units for (a) limited time. This will generate interest and translate into sales. “
Lee also highlighted the launch of The Linq @ Beauty World, with 96 percent of units purchased on the first day.
“The sales were made on all types of units and further demonstrated that there are many buyers in the market that do not require reissuing options,” he said.
Looking ahead, Ms Sun says she is positive about the prospects for the real estate market as Singapore heads towards Phase 3 of its reopening.
“As Singapore is on the cusp of the third phase of reopening, market sentiment is about to improve as increased economic activities will help revive many business sectors next year,” he said. “The gradual restoration of aviation connectivity may bring more foreign buyers back to Singapore’s property market in the coming months.”
Recent global events, including the prospect of warmer ties between the United States and China following Joe Biden’s victory in the US presidential election, also bode well for Singapore’s real estate market, said Wong Siew Ying, chief research and content of PropNex.
Analysts forecast that up to 9,500 residential units could be sold in 2020, with just over 8,000 already sold for the year through October.
“Although the estimates are lower than (the) 9,912 units sold in 2019, it is still comforting that more than 9,000 new homes can be sold this year, considering that the pandemic is probably one of the worst (crisis) to hit the real estate market. from Singapore. ”Ms. Sun said.
