Sensitive pricing, surge in new launches drive rebound in private home sales

SINGAPORE — Sales of private new homes rose by 47.2 per cent in March from a year before, though this should not be seen as the impact of cooling measures wearing off, analysts have said.

There were 1,054 private residential units sold last month, up from 716 in March 2018, figures from the Urban Redevelopment Authority showed.

A total of 1,812 units were launched by developers last month, compared to just 614 in March 2018.

Analysts attributed the increase in sales to two reasons: Sensitive pricing by developers and the launch of new properties.

REASON 1: PRICE IS RIGHT

PropNex Realty chief executive officer Ismail Gafoor said developers are pricing properties sensitively following the cooling measures implemented in July 2018, which saw loan limits tightened and the Additional Buyer’s Stamp Duty (ABSD) raised.

Analysts observed that buyers and investors are more willing to commit after being on the sidelines, comparing sales from January till now.

“Particularly, buyers are favouring projects that are rightly priced; even previously launched projects such as The Tre Ver, Parc Botannia and Riverfront Residences continue to be in strong demand,” said Mr Ismail.

Although most of the sales were observed to be from the mass market, with 79 per cent buying homes priced at S$1.5 million and below last month, the super luxury home segment picked up as well.

A record 25 new private homes were sold above S$5 million, the highest in a single month since December 2013.

Ten of them were bought by Singaporeans, while the rest were snapped up by foreigners. These units are from Boulevard 88 and Marina One Residences.

“Right now, more and more high-end launches such as Boulevard 88 and Marina One Residences are available. With more options, this can sometimes attract more buyers as well,” said Ms Christine Sun, head of research and consultancy at property company OrangeTee.

Despite the ABSD for foreigners increased by 5 percentage points to 20 per cent, Singapore still remains an attractive investment location for this segment, added Ms Sun.

REASON 2: TEMPORARY BOOST

The sales might be boosted by new property launches, analysts said. Of the 1,054 units sold last month, 438 of them belonged to 10 new projects.

The 10 debutantes — including Treasure at Tampines and The Florence Residences — have a total of 4,269 units, but only 10 per cent were sold last month, noted Singapore Management University adjunct lecturer Ku Swee Yong.

“New sales are happening partly due to the marketing campaigns and the energy of thousands of property agents,” added Mr Ku, who teaches real estate investments and finance.

Citing previous projects like Park Colonial, Mr Ku said sales will plateau off as property agents move on to newer projects after its initial launch period.

“Unless the (newly launched projects’) marketing campaign can be maintained at high gear, future sales may be rather slow,” he added.

Despite the higher take-up rate last month, Mr Ismail agreed that this might not persist in the long run.

“This does not reflect that the overall market sentiment has fully recovered,” he said. “With that being said, developments that are priced right are bound to attract buyers and investors.”