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New private homes see lowest March sales in five years

SINGAPORE — Sales of new private homes hit a five-year low in March as tightened Covid-19 safe distancing measures resulted in fewer major condominium launches and shuttered showflats, data from the Urban Redevelopment Authority showed on Wednesday (April 15).

Visitors to Ola executive condominium's show gallery on March 19, 2020. Tapes on the floor mark out the spaces for visitors to stand during viewing, to keep a minimum distance from each other.

Visitors to Ola executive condominium's show gallery on March 19, 2020. Tapes on the floor mark out the spaces for visitors to stand during viewing, to keep a minimum distance from each other.

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SINGAPORE — New private homes saw the lowest March sales in five years last month as tightened Covid-19 safe distancing measures resulted in fewer major condominium launches and shuttered showflats, data from the Urban Redevelopment Authority showed on Wednesday (April 15).

Excluding executive condominiums (EC), a total of 660 units were sold last month, a steep 32.4 per cent drop from the 976 units sold in February, as the turbulent pandemic shut foreign buyers out of the country and kept local homebuyers at bay.

The circuit breaker period from April 7 to May 4, which resulted in the suspension of nearly all property sales activities, is also certain to do more damage to the private housing market in the month ahead, property analysts added.

FEWER PROPERTY LAUNCHES

The timing of the pandemic is especially unfortunate, considering that the months of March to May tend to be bumper months for developer sales, comprising up to 38 per cent of total yearly sales from 2015 to 2019, said Mr Wong Xian Yang, associate director of research for Singapore and South-east Asia at Cushman and Wakefield.

“As such, buyers held back on their purchasing decisions, amid heightened economic uncertainty,” said Mr Wong.

However, other analysts said the lack of major property launches in recent months was more likely to be the reason for the dismal sales figures, rather than the loss of interest from homeseekers.

The fall in March sales follows a 38 per cent drop in the number of new project launches that month, compared with February.

A total of 578 units were launched in the whole of March, down from 933 in the previous month. Only one large development was launched last month — Ola, a 548-unit executive condominium in Sengkang — with 170 units sold.

JadeScape, a Shunfu Road condominium which launched in January, sold 76 units in March, which was the highest performing non-EC project last month. This is followed by the sale of 69 units at the Treasure at Tampines condo, and 63 units of Parc Esta condo in Eunos.

INTEREST WANING?

Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, noted that among the three market segments, only those in the core central region saw lower sales in March, while those outside saw a pick-up in sales.

“New home sales in the Rest of Central Region (RCR) and Outside Central Region (OCR) remained resilient last month as many deals were probably near completion prior to the worsening of the Covid-19 outbreak and before stricter safe distancing measures kicked in at the end of March.

“Some investors may have also bought properties to diversify their investment portfolios after the stock market rout in March,” she added.

Mr Lee Sze Teck, director of research at Huttons Asia, said that in the past six months, including March, sales volume has consistently exceeded launch volume.

“If we compare the first quarter of 2019 to the corresponding period in 2020, 2020 is a very good year for the market, with sales estimated to be around 20 per cent higher than the same period in 2019.

“Property is proving to be an enduring asset class for many in times of uncertainty and the desire for wealth preservation amid the stock market rout,” said Mr Lee.

Ms Sun pointed out that foreigners bought fewer homes last month due to stricter border controls impacting several countries.

“The number of non-permanent residents buying non-landed new homes dipped to 25 units last month, below the 51 units that were averagely sold over the past 12 months. Consequently, the proportion of Singaporeans buying non-landed new homes rose to a fresh high of 86.3 per cent in March 2020 since April 2009, which was 87.7 per cent,” she said.

Chief executive officer of PropNex Realty, Mr Ismail Gafoor, said that sales in March were “commendable” despite the lack of major launches.

“Despite the current Covid-19 pandemic, rightly-priced projects that were previously launched have been a pull factor in attracting buyers and investors, a trend that we expect to continue in the aftermath of circuit breaker measures,” he said.

POST-CIRCUIT BREAKER

There is also some cause for hope in the first week of sales in April, before the circuit breaker measures kicked in, noted Hutton’s Mr Lee. An estimated 150 caveats for private residential properties were lodged in the first five days of April.

“If this is extrapolated for the whole month, we might see 900 transactions in April, which is much higher than March,” said Mr Lee, though this is unlikely to happen.

While there was some optimism over the March figures, April could be a write-off for the private property market, with sales figures sustained mostly by nearly completed transactions prior to the circuit breaker.

Property-related activities, such as home viewings and showrooms, have ceased during the circuit breaker period — the buying and selling of homes are not considered as essential services.

An expected deep recession due to the pandemic and the weakening global economy could also pull the brakes on a turnaround after the circuit breaker period ends, presumably on May 4, said real estate experts.

Mr Wong from Cushman and Wakefield added that April sales numbers could potentially fall below 400 units, as developers hold back launches and buyers adopt a wait-and-see attitude.

But some hope remains. Once the safe distancing measures ease, Ms Sun from OrangeTee said new homes sales could pick up as showflats reopen and house viewings resume.

Singapore could also see some inflow of investments from global investors who seek shelter in “safe-haven assets” here, she added.

Property analyst Ong Kah Seng said: “April's circuit breaker put Singapore's property market into a limbo state of shock, although it (could) effectively contain the infection, and help Singapore's economy to eventually stabilise, benefiting all property investors in longer term.”

Post-circuit breaker, Mr Ong said developers may need to attract buyers by cutting prices or accepting lower profit margins in order to quickly close the deal when the measures are lifted.

“There's no certainty that the negotiation table will be perpetually available should another circuit breaker be required again if Covid-19 infections re-spike, after this existing circuit breaker is over," he said.

 

CORRECTION: An earlier version of this article stated that sales of new private homes hit a five-year low in March. This is incorrect. It was the lowest March sales in five years. We are sorry for the error.

Related topics

URA Property circuit breaker Covid-19 coronavirus

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