January’s strong new home sales likely to be a one-off

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JANUARY’s new private-home sales rose 32 per cent to 1,609 over December’s 1,217, on the back of launches of a few mega projects, pulling up prices further.

The bulk of January’s buyers were locals, but the number of foreign buyers – although small in absolute terms – also rose sharply amid low interest rates and abundant liquidity.

But consultants say that because no more mega projects are expected for the rest of the year, January’s sterling showing is unlikely to be repeated.

February’s new-home sales may be only half of last month’s, given the lack of new launches, said Lee Sze Teck, Huttons Asia’s director of research.

January’s monthly sales are the highest notched since July 2018’s 1,724, and up 160 per cent from the 620 achieved in January 2020.

The 2,600 units launched for sale in January was also the most since March 2013’s 3,489.

The number of units launched for sale is the highest January figure since the Urban Redevelopment Authority (URA) started the series in 2007; it is also the highest since March 2013, said Mr Lee.

“Developers rode on the positive sentiments and pushed out more units for sale,” he said.

The figures, released by the URA on Monday, exclude executive condominium (EC) units, which are a public-private housing hybrid.

Including the 489 ECs sold, developers moved 2,098 new homes in January, up 66 per cent from December and up 228 per cent from January 2020.

Last month’s top-selling project was the 1,862-unit Normanton Park, which sold 625 units.

This was followed by the 700-unit Parc Central Residences EC, which sold 417 units, and the 429-unit The Reef at King’s Dock, which moved 221 units.

Mr Lee said the sales achieved at Normanton Park also broke a record.

“This certainly creates a positive vibe and sets the tone for the property market. The affordable quantum, low-interest-rate environment, ample liquidity, large base of HDB upgraders, recovery of the property market, perceived shortage in supply and pent-up demand for this long-awaited project resulted in the overwhelming response to it,” he said.

He added that sales also received an added impetus in January because talk of a fresh lot of cooling measures being imposed on the market are fanning the fear of missing out.

Rumours are that policy tweaks could be on the horizon to cool Singapore’s buoyant residential segment, as the government is keeping an eye on the real estate market, The Business Times reported this month.

Home prices gained pace last year, even as the economy fell into recession.

Deputy Prime Minister Heng Swee Keat said in January that the property market must remain stable so young Singaporeans can own their homes.

Mr Lee said that large crowds have tended to gather outside show flats when the government announces new cooling measures.

“In this ‘new normal’, where crowds are frowned upon and discouraged, the government may want to take this into consideration, should the announcement of new cooling measures spark huge crowds and perhaps a spike in Covid-19 infections,” he said.

Christine Sun, senior vice-president for research and analytics at OrangeTee & Tie, said: “On-the-fence buyers could have decided to take action as they think their buying eligibility or borrowing limits could be affected by possible new cooling measures.

“Some long-term investors sprang into action as they anticipated that it could become harder to own a second or third property if new cooling measures are implemented.”

She said that some buyers were also trying to avoid a repeat of the July 2018 scenario in which crowds jostled to enter condominium show flats to make last-minute purchases before the cooling measures kicked in.

Ms Sun added: “Some buyers were turned away; others were unsuccessful in their ballots to obtain a property.

“Even if cooling measures are not implemented, buyers may still be in a better position to buy a unit sooner rather than later, given that prices of homes are likely to rise further, with the global economy expected to pick up this year.”

Affordable absolute pricing helped to drive sales in January; two-thirds (about 67 per cent) of the units sold that month were less than 800 sq ft in size; about 63 per cent of total sales were for units costing under S$1.5 million, noted Ong Teck Hui, JLL senior director for research and consultancy.

“As the private residential market is expected to pick up this year, boosted by the expected economic recovery and the vaccine roll-out, demand is likely to remain strong and prices are expected to continue trending upwards,” he said.

The median price for new non-landed homes in January 2021 was S$1,778 per sq ft (psf), higher than the median price of S$1,734 psf in Q4 2020 and S$1,682 psf in Q3 2020 – indicative of a sustained increase in prices, he said.

More foreigners returned to the market.

Data retrieved from URA Realis indicates that there were 89 private new home transactions by foreigners in January – the highest number since the 91 transactions in July 2018.

Wong Siew Ying, PropNex head of research and content, citing Realis data, said: “Local buyers continued to account for the bulk of the sales last month, with about 83 per cent of total new homes transacted being bought by them.”

Referring to the number of caveats lodged, she noted a rise in the number of new homes sold to overseas buyers over three consecutive months: 30 in November 2020, 38 the following month, and 89 in January.

“We could potentially see a gradual increase in interest from foreigners, with several upcoming launches in the CCR, which tends to attract such buyers,” she said.

CCR or Core Central Region sales, where the most expensive homes are, have been low. CCR sales in January numbered 82, higher than the 59 in December, but unchanged from November.

The number of homes costing more than S$2 million made up 10.6 per cent or 222 units in January, including ECs.

There were only four transactions which cost more than S$5 million.

Some of the upcoming high-end launches in the prime segment include Midtown Modern, Cairnhill 16, The Atelier, Park Nova (the former Park House), Klimt Cairnhill (the former Cairnhill Mansions), the former Liang Court, and the residential site at Irwell Bank Road.

With only smaller projects expected in the rest of the year, the consultants are expecting full-year 2021 sales to fall below that of 2020.

“We are expecting 2021’s new home sales to be around 8,000 to 9,000 units – below the 9,982 units transacted last year,” said Ismail Gafoor, PropNex’s chief executive.

“A key reason for the lower forecast is that there are not that many large projects in the launch pipeline this year. Unsold inventory in the market has also dwindled,” he said.

CBRE Research also expects that new home sales for 2021 are likely to fall in the region of 8,000 to 9,000 units.

But Leonard Tay, Knight Frank Singapore head of research has a higher estimate of about 10,000 new sales.

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