August home sales dive; prices steady

Source : Business Times - 16 Sep 2008

Developers put off launches while buyers wait out Hungry Ghost month

ALES of new homes fell sharply in August as developers held back launches and buyers waited out the slow Hungry Ghost month amid global turmoil.

Some hope: In August, mass market homes continued to fare better. At Hong Realty’s Livia (left), some 32 units were sold at a median price of $659 psf while in the upmarket Ritz-Carlton Residences (below)one unit transacted at above $3,500 psf

The number of new homes sold fell sharply to 320, down 64.3 per cent from the 897 homes sold in July this year. The number of home sales in August 2008 was also down 81.4 per cent from the peak of 1,720 units sold in August 2007 at the height of the property boom.

But interestingly, the number of purchases outstripped the number of units launched by developers for the first time since April. Developers launched just 194 units in August - the lowest number over the past one year. Even in February this year, when just 185 homes were sold, developers rolled out 343 new units.

Expecting lacklustre numbers for the Hungry Ghost month, developers held back their launches, noted one property insider. ‘If more projects had been launched, sales would probably have been better,’ he said.

The Hungry Ghost month, widely deemed to be an unlucky period for homebuying, fell in August this year. However, this taboo has been ignored in past years during property booms.

Developers could also have used the month as an opportunity to hold back launches as they wait for the market sentiment to improve, said Nicholas Mak, director of research and consultancy at Knight Frank.

But most property analysts generally agreed that August’s numbers were not as bad as feared.

‘When you consider that there was a lack of launches and a lack of advertising, the sale numbers were not that bad,’ said DBS Vickers’ property analyst Adrian Chua. ‘I was pleasantly surprised.’

Prices also appear to be holding steady - for now.

‘Surprisingly, prices are still holding up,’ said CIMB analyst Donald Chua. ‘But if volumes continue to be so thin, I wouldn’t be surprised if there are some price cuts.’

Volumes continued to be low, especially in the high-end segment. In August, just three units were transacted at above $3,500 per square foot (psf) - two units from Nassim Park Residences and one from The Ritz-Carlton Residences Singapore Cairnhill. Another five units were sold for between $3,000-$3,500 psf.

Mass market homes continued to fare better. ‘Despite having no new launches in this month, the outside central region (OCR) recorded a total transaction of 89 units,’ pointed out Chua Yang Liang, head of research for South-east Asia at Jones Lang LaSalle.

At Hong Realty’s Livia, for example, some 32 units were sold at a median price of $659 psf. Another 15 units were sold in GuocoLand’s The Quartz at a median price of $725 psf.

Looking ahead, a slight increase in sales volume is anticipated for September. But market watchers should not expect a large pick-up in numbers, analysts warned. ‘The stock market is still getting hammered,’ noted Mr Mak. ‘And it’s the middle of September, but we haven’t seen any major launches yet.’

Developers’ cautious sentiment can be expected to continue into next year.

‘As more bad news unfolds from the western financial institutions, we would expect developers to turn more cautious and perhaps delay launches further until clarity is improved in the first half of 2009,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

Echoed Li Hiaw Ho, executive director at CBRE Research: ‘For the rest of the year, the mood of the market is likely to maintain the status quo as the market remains wary of a weakening in the global economic environment.’