New home sales up 24%, boosted by Jurong condo

SINGAPORE — New private home sales surged last month, driven by strong demand for a condominium in Jurong that all but sold out during its debut weekend. Analysts, however, warn that volume will plunge this month because of new rules limiting the amount home buyers can borrow.

Developers sold 1,806 new homes last month, according to data released yesterday by the Urban Redevelopment Authority (URA), up 23.8 per cent from 1,459 units in May and 31.7 per cent higher than in June last year.

PropNex Realty Chief Executive Mohamed Ismail said the June numbers were “exceptional”, especially bearing in mind that the month is traditionally a quieter sales period because of the school holidays, when more families travel.

The jump in sales was due to new launches in suburban areas that have seen healthy demand in recent months. The standout performer was MCL Land’s J Gateway, which contributed 40 per cent of total new home sales last month. All but one of its 738 units were sold. It is the first condo to be launched near Jurong East MRT Station in 10 years.

At a median price of S$1,486 psf, the condo was more expensive than most suburban private residential properties, but that did not put off buyers, who were attracted to its location next to the JCube and Jem malls.

Mr Ismail said: “The pent-up demand was mainly due to the Master Plan development in Jurong and the excellent location.”

Another project that did well was Jewel@Buangkok, which achieved more than 80 per cent sales at a median price of S$1,183 psf.

The exceptional figures for J Gateway and Jewel@Buangkok caused a surge in sales of suburban homes to 1,361 units last month, accounting for three quarters of total transactions. This is almost twice those in May.

Meanwhile, the number of condo units sold in the city centre dipped to 119 units last month, from 125 in May, while those sold in the city fringe fell from 602 to 326 units.

The Total Debt Servicing Ratio (TDSR) framework, which took effect on June 29, came too late to have any significant impact on last month’s sales, analysts said, but they added it would hit volumes this month. Under the TDSR rule, a property loan must not push the borrower’s total debt obligations to above 60 per cent of his or her gross monthly income.

Mr Alan Cheong, Senior Director of Research and Consultancy at property firm Savills, said: “A possible effect of the new TDSR framework is that it prolongs the sales process as buyers need clarity on the amount they can borrow. July’s sales may be as low as half of June’s number.”

Mr Eugene Lim, Key Executive Officer at ERA Realty Network, forecast a 20 to 30 per cent fall in sales volume this month because of the new rules.

He said: “Investment demand is predicted to decrease further as guarantors will now have to be brought in as co-borrowers. This will discourage investors who tried to avoid paying the Additional Buyer’s Stamp Duty and obtain a higher Loan-To-Value ratio by using their children’s names to purchase a second property.”

“Also, the new Monetary Authority of Singapore guidelines, which require a mountain of supporting documents and paperwork to be gathered and assessed by bankers before they can grant any loan, is slowing down the loan approval process significantly.”

Mr Desmond Sim, Associate Director of CBRE Research, said that, while the full force of January’s property market cooling measures combined with the TDSR rule might put a dent in sales volume, “the market is still on target for a total sales tally of 16,000 to 18,000 units for the whole of 2013”.

He added: “Developers with deep pockets will continue to hold and keep prices at current levels.”