New private home sales in Singapore plunge 51.7% in October after new curbs

• Developers sold 642 private homes in October
• This is down 51.7 per cent from the more-than-two-year high of 1,329 units sold in September 
• Analysts say this was likely due to a move by the Government to forbid the reissue of options to purchase and a dearth of new launches

SINGAPORE — New private home sales in Singapore plunged more than 50 per cent in October amid a dearth of fresh projects and restrictions on the reissue of options to purchase (OTP).

Private developers sold 642 units, excluding executive condominiums (ECs), in October, data from the Urban Redevelopment Authority (URA) showed on Monday (Nov 16).

This is down 51.7 per cent from September's more-than-two-year high of 1,329 units, and also a decline of 31.1 per cent compared to the same month last year, when developers sold 932 homes.

Most of the units sold last month, 292, were in the Outside Central Region (OCR), while 283 were in the Rest of Central Region (RCR) and 67 in the Core Central Region (CCR).

NEW RESTRICTIONS, LACK OF LAUNCHES

Ms Christine Sun, the head of research and consultancy at OrangeTee & Tie, noted that the figures marked the first drop in sales after five consecutive months of growth, and named two factors as the likely causes for the decline: New restrictions on the re-issuing of OTPs and a lack of launches.

“New curbs on the re-issuing of OTPs seemed to have taken a toll on the market as sales figures slipped more than 50 per cent last month,” Ms Sun said.

The new restrictions were implemented by URA in September “to instil greater financial discipline” and ensure that “purchasers commit to a property purchase only when they are ready to exercise the OTP within the validity period”, Ms Sun noted. 

Under the new rules, developers cannot re-issue an OTP to the same purchaser for the same unit within 12 months after the expiry of the earlier OTP.

An OTP expires three weeks after the sale and purchase agreement and copies of the title deeds are delivered to the intending purchaser.

"Some buyers may now need more time get their finances together, selling their existing property first – such as in the case of HDB upgraders - before committing to a private property purchase," said Ms Wong Siew Ying, head of research and content at PropNex Realty.

"We believe this halt in the re-issue of OTP has temporarily put the brakes on the steadily rising new home sales, but give it some time and we believe the market will readjust and find its rhythm again," she added.

LACK OF NEW PROJECTS IN OCTOBER

There was only one new launch in October - the 319-unit Hyll on Holland. In all, developers launched 423 units last month, lower than the number of homes launched during the circuit breaker period”, noted Ms Sun.

Mr Lee Sze Teck, director of research at Huttons Asia, pointed out that the number of launches was the lowest in 2020 and the lowest since Dec 2019.

Taking this into account, Mr Ismail Gafoor, the chief executive of PropNex, called October's figures a “credible performance”.

“October’s sales decline was within our expectations. To put things in perspective, we note that September’s impressive sales were partly driven by new launches including Penrose, Verdale and Myra, but there were limited new launches in October,” he said. 

“Therefore, we think the sales tally of 642 units last month is still considered a credible performance - it is a sign of steady confidence in the property market and reflects relatively healthy underlying demand for homes.”

SINGLES’ DAY, PHASE 3 BOOSTS AHEAD?

Mr Lee said that private home sales may improve in November due to promotions and new launches.

“There were 11.11 promotions rolled out by developers in November in conjunction with the largest shopping event, Singles’ Day,” he said. “Promotions of more than S$500,000 were dangled for select units for (a) limited time. This will drum up interest and translate into sales.”

Mr Lee also highlighted the launch of The Linq @ Beauty World, with saw 96 per cent of units snapped up on day one. 

“The sales were across all unit types and further proved that there are many buyers in the market who do not require re-issue of options,” he said.

Looking further ahead, Ms Sun says she is positive on the outlook for the property market as Singapore heads towards Phase 3 of its reopening from the circuit breaker.

“As Singapore is at the cusp of the third phase of reopening, market sentiment is poised to be lifted as the increase in economic activities will help to revive many business sectors next year,” she said. “The gradual restoration of aviation connectivity may see more foreign buyers returning to Singapore’s property market in the coming months.”

Recent global events, including the prospect of warmer ties between the United States and China after Joe Biden’s US presidential election win, also bode well for Singapore's property market, said Ms Wong.

Analysts forecast that up to 9,500 residential units could be sold in 2020, with just over 8,000 already sold for the year up to 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 could be sold this year, considering that the pandemic is probably one of the worst (crises) to hit Singapore's property market,” Ms Sun said. CNA

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