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Uptick in private home sales in first half of year amid renewed optimism

SINGAPORE — The first half of this year saw developers selling 72 per cent more private residential units from a year ago, as the market saw renewed optimism amid tweaks in the cooling measures in recent months.

Market sentiment in the property sector has lifted since tweaks to the cooling measures in March. In the first six months of the year, developers sold 6567 private housing units compared to 3814 units during the same period last year, a 72 per cent increase. TODAY file photo

Market sentiment in the property sector has lifted since tweaks to the cooling measures in March. In the first six months of the year, developers sold 6567 private housing units compared to 3814 units during the same period last year, a 72 per cent increase. TODAY file photo

SINGAPORE — The first half of this year saw developers selling 72 per cent more private residential units from a year ago, as the market saw renewed optimism amid tweaks in the cooling measures in recent months.

There are signs of the market bottoming out, said experts, with the supply glut easing and developers’ inventory of launched and unsold private housing units at a six-year low.

Buyers are seen stepping up to snap up some homes with the expectation that prices are expected to climb up following the higher bid prices at Government land sales. However, affordability still remains a top priority for investors.

Developers sold 6,567 units excluding executive condominiums (ECs) from January to June, compared with 3,814 units in the same period a year ago, according to preliminary data from the Urban Redevelopment Authority (URA) TODAY compiled.

The EC segment similarly saw a 10 per cent increase, with 2,083 units sold in the first half this year compared with 1,887 units a year ago.

“Buyer interest has definitely grown compared to the past year. Across both the new sale and resale markets, there have been significant increases in the number of transactions. Developer sales are over 70 per cent higher than the first half of 2016 and resale volume is some 60 per cent more than the same period last year,” said Mr Eugene Lim, key executive of ERA Realty Network.

Mr Nicholas Mak, head of research and consultancy at ZACD Group, added: “There is an improvement in homebuyers’ sentiments. Some buyers who were ‘sitting on the fence’ have started to explore opportunities in the property market.”

The market exuberance of late has been due to a mixture of factors, shared Mr Lim. He noted that the slight tweak to the Seller’s Stamp Duty (SSD) stoked buyer optimism. In March, the Government reduced the SSD, the stamp duties that sellers have to pay on residential properties and slightly relaxed rules on loan thresholds.

“When the Government shortened the holding period for the SSD to three years for purchases made on March 11 onwards, that led to more optimism among buyers of new projects,” said Mr Lim. “This is because the typical construction period of new projects is around three years. So by the time the project obtains temporary occupation permit, these buyers can have the option of selling should opportunities present themselves — without having to pay the SSD. So, we are indeed seeing more buyer interest in new project launches.”

Also, many buyers are expecting new launches next year to be priced higher than this year’s, due to higher land tender prices, which prompted them into action, he added.

Mr Desmond Sim, head of CBRE Research, Singapore and South-east Asia, noted that even though buying activity is on the uptrend, affordability still remains key. “What’s driving the market now is people are buying in the quantum of S$1.5 million and below.”

In the first half of the year, 93 per cent of new private homes sold were less than S$2 million each, according to data from CBRE Research.

The best-performing segment was the outside central region because that is where the price affordability remains, Mr Sim said. While the upgrader’s market would probably see some value in the city fringe segment or rest of central region, sales in the core central region (CCR) still remains quite limited, he noted.

“At the end of the day, CCR per square feet is still expensive, most of the products are also relatively quite big in size and hence its quantum will be bigger,” Mr Sim said.

Even though affordability remains top of the list for buyers, many are shopping around projects that are previously launched properties.

“That’s one of the reasons why in the recent June numbers, where there were no major new launches, people were still buying because they believe that now is a good time to buy. The pressures from the new land sites have shown that land prices have gone up and that will have an upside pull to prices in the future,” Mr Sim explained.

With buyers clearing up some backlog of properties, the supply glut has also eased.

“The developers’ inventory of launched and unsold private housing units has fallen to a six-year low. In June this year, the inventory was 4,208 units — the lowest since January 2011,” said Mr Mak.

“Unsold volumes are diminishing,” said Mr Sim, adding that buyers were now going back to previously-launched units to pick up bargains versus snapping up new launches. “It doesn’t have to be a property with a sold out volume within the first two weeks of launch.”

Going forward, Mr Sim shared that, in order for developers to get good success rates in sales in volume, they would still have to maintain the affordability — in the sweet spot below S$1.5 million. “People will take their time and slowly pick and still buy, but at the end of the day the total quantum still counts,” he said.

Mr Mak expects the buying demand in the private and EC primary markets to remain healthy, barring systematic shocks, such as unexpected policy introduction.

“If the inventory of unsold units were to continue to dwindle, it could provide some developers with the excuse to increase prices,” he said.

Mr Lim expects an uptick in developer sales this month and next, as Hundred Palms Residences (EC), Martin Modern and Le Quest commence their sales. For the year, Mr Lim expects new home sales to come in the range of 10,000 to 12,000 for private residential units and 3,000 to 4,000 units for ECs. Last year saw a total of 7,972 units of private property sold, according to URA data.

“Provided that the launches come in time, I won’t be surprised if we hit 8,000-10,000 units in new sales for this year,” Mr Sim said. “The key thing now is that there are many indicators to show that the trough of the market has bottomed out. It is a good time now to go around.”

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