Showflats reopening, low interest rates among reasons behind doubling of private home sales, analysts say
SINGAPORE — The sales of new private housing units in Singapore more than doubled in the month of June, with 998 units being sold compared with 487 in May. This was based on data released by the Urban Redevelopment Authority on Wednesday (July 15). The take-up last month is the highest seen in June since 1,806 units were sold in June 2013.
- Sales of private housing units rose by 105 per cent in June from May
- More than half of June’s sales were done between June 19 and 30, after showflats reopened
- Analysts said that the increase can be attributed to the reopening of showflats and investors plonking money on “safer” assets such as property
- Others said that Singapore is still an attractive market for foreign buyers
SINGAPORE — The sales of new private housing units in Singapore more than doubled in the month of June, with 998 units being sold compared with 487 in May. This was based on data released by the Urban Redevelopment Authority on Wednesday (July 15).
The take-up last month is the highest seen in June since 1,806 units were sold in June 2013. It is also the highest monthly figure since November 2019, when 1,165 new homes were transacted, property analysts said.
This 104.9 per cent leap from May to June is also higher than the 75.8 per cent increase from April to May, when the circuit breaker to halt movement of people and non-essential business activities was in effect.
Mr Wong Xiang Yang, the associate director of research at property company Cushman & Wakefield, said: “It’s the highest June sales figure since 2013 due to seasonality reasons… and the release of pent-up demand in June this year due to the circuit breaker and closure of showflats.
“Sales in June tend to fall due to the school holidays as buyers hold off on purchasing decisions and go on holidays. This year, that didn't happen (due to travel restrictions).”
If the figures take into account new executive condominiums, which are public-private housing hybrids built by private developers, sales of private homes in June jumped 102.2 per cent — from 510 units sold in May to 1,031 last month.
The increase from April to May for this category was 74.1 per cent.
REASONS FOR BOOM IN SALES
1. Reopening of showflats
Mr Wong said that the jump in transactions can be attributed to the reopening of showflats on June 19, with about 54 per cent of sales completed between June 19 and 30.
During the circuit breaker period, showflats were closed and in-person property viewing was curbed. The Government eased restrictions in phases and the second phase of the resumption of activities started from June 19.
Mr Wong added: “A big driver (of the sales) was the pent-up demand that was accumulating when showflats remained closed.”
Mr Nicholas Mak, who heads the research and consultancy department at ERA Realty, said that while virtual showflats were useful alternatives during the circuit breaker, homebuyers still “prefer the real thing”.
Ms Christine Sun, head of research and consultancy at property agency Orange Tee, concurs, pointing out that some buyers prefer to check out the physical showflats to have a better visualisation of the unit layouts and floor plans, while others would want to assess the quality of furnishings and fittings featured in the mock-up units.
Be that as it may, Mr Ong Kah Seng, who has been a property analyst for 16 years, said that virtual property viewings “will have continued special relevance”.
He believes that the surge in sales could also be due to developers preferring to take the “traditional approach”, to “quickly meet buyers in the showflat to seal the deal on the spot”.
“Moreover, all buyers have to make appointments to visit the showflat and the precious time means that each negotiation session will be more targeted and focused, and the potential to seamlessly close the deal on the table is higher if pricing is right.”
2. Pricing and market outlook
When it comes to pricing, Mr Wong of Cushman & Wakefield said that there is a demand because the new private developments are “still considered reasonably priced, before prices head north”.
“Given the good sales momentum in April and May, developers are rather firm in terms of the selling prices and some buyers decide to commit before prices rise further,” he said, noting that prices have been going up in recent transactions and some developers have raised prices.
“Nonetheless, the surge of transactions is a reflection of healthy underlying demand for private residential properties despite the dim economic outlook,” Mr Wong said, adding that demand is mainly driven by Singaporeans, who contributed to about 83 per cent of sales in June. Singapore permanent residents made up 12 per cent while foreigners made up 5 per cent.
Ismail Gafoor, chief executive officer of property firm PropNex, agreed that it is a “buyer’s market”, noting that units are more attractively priced.
“Amid concerns about the economic downturn and jobs, there are still genuine buyers out there with ample liquidity, who are taking advantage of the low interest rates to purchase well-priced units,” he said.
Data showed that 86 per cent of new units sold in June were S$2 million and under, compared with 96 per cent in May. PropNex expects the S$2 million-and-below pricing brackets to remain the sweet spot.
In terms of size, units under 800 sqf were the most popular, accounting for 55 per cent of new sales in June.
Ms Sun of OrangeTee said that the increase in sales can also be attributed to more investors shifting their funds to “safe-haven assets like properties”, given the growing macro-economic uncertainties and volatility of the equities market.
“The market is also supported by the low-interest-rate environment and ample liquidity that is flowing into the asset markets due to the massive quantitative easing programmes launched around the world,” she added, referring to the monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity.
3. Attractive market for foreign buyers
After the circuit breaker period, foreign buyers returned to the market, Ms Sun observed, noting that the number of non-landed homes bought by this segment of buyers increased substantially last month. She anticipates that more foreigners are expected to buy private homes in the coming months.
There were 49 non-landed private homes bought by non-permanent residents in June, an increase from the 14 transacted in May and seven in April. This is also higher than the 33 units transacted in June last year.
She said: “Many foreigners have bought properties last month as the growing macro-economic uncertainties have driven more overseas investors to seek shelter with safe-haven assets here… based on their trust in our legal system, quality of finishes and investment potential of properties.”
Mr Ong concurred: “Wealthy foreigners have always appreciated political stability in Singapore, comparative with theirs back in their country.”