Record private home sales

Source : Straits Times – 16 Jul 2009

1,825 sold in June even higher than during peak of the boom in Aug 2007

IT WAS another electrifying month for the private home market, with sales last month surpassing even levels seen at the height of the boom two years ago.

The recession-defying numbers for yet another month point to surging confidence among buyers and sellers, and signal that the worst is likely over.

– PHOTO: ALLGREEN

Developers sold 1,825 units last month, up from the 1,673 moved in May and almost 100 more than the number shifted in August 2007, the peak of the boom.

Even more remarkable, the April to June sales of 4,714 units surpassed the total of 4,264 new private flats sold last year, said CB Richard Ellis.

It felt like the good old days were back for developers last month, with 1,637 units launched, 475 more than in May, Urban Redevelopment Authority data showed yesterday.

That was the second highest number of launches since August 2007.

Values are also responding to the heightened activity, with median prices at some projects last month higher than in May.

Property consultants cite the continued strong demand since February and June’s record sales to tip that the worst appears to be over. Some also expect a price recovery soon.

Colliers International’s Tay Huey Ying reckons that last month’s record number of primary home sales was driven by pent-up demand from both owner-occupiers and investors. This was helped by prices that remained largely at a discount from peak prices, even if they may have strengthened recently.

Knight Frank chairman Tan Tiong Cheng said the market had been shell-shocked for a period and sales fell off a cliff last year, but the perception now is that the worst is over.

‘Although it may still take a while for the economy to find its feet, as the Government has suggested, buyers are now prepared to make a decision,’ he said.

‘They feel that this is a window to buy. Interest rates are at the lowest ever, and there is a good selection of condos out there. Things are not getting better, but they are not getting worse.’

CBRE Research executive director Li Hiaw Ho added: ‘While 2007 was the climax of the bull-run in terms of sales volume, 2009 likely represents the turning point at the trough of the market.’

If the buying momentum is sustained and the economy strengthens gradually, the take-up for the whole year could reach up to 14,000 units, higher than the 2006 level of 11,147 units, he said. Sales in 2007 were a record 14,811 units.

The sales drive could also send prices up from a low in the second half of the year, added Mr Li.

City-fringe homes were the most popular last month, with 867 sold, including the 330-unit 8@Woodleigh in Woodleigh Close, which sold out at a median price of $804 per sq ft. The only sell-out project in June, its small, affordable units were a key attraction, experts said.

Large units are generally moving slower than the small ones, they said, due to the higher quantum price.

The return of interest in high-end deals priced above $2,000 psf was also noted last month, said CBRE Research.

A unit in the Ritz-Carlton Residences went for $3,404 psf, while one in The Orchard Residences was sold for $3,299 psf.

These made up the 23 high-end deals last month, up from 15 in May. That is still a very small number, but ‘a sign that there are high net worth individuals out there who are prepared to buy investment-grade properties despite uncertainties in the economy’, said Mr Li.

Jones Lang LaSalle said it was starting to see a return of interest from foreigners seeking opportunistic buys.

The narrower price gap is a major factor behind the bullish sentiment, especially among HDB upgraders, said Dr Chua Yang Liang, the firm’s head of research for South-east Asia and Singapore.

Its number-crunching shows that the price gap between non-prime residential projects and HDB resale flats are now similar to 2004.

‘As long as this gap remains tight, this stream of HDB upgraders into the private residential market is likely to continue,’ he said.

Nevertheless, these buyers are very price-sensitive. ‘There is some upward price movement, but there is no shortage of supply,’ said one expert.

DTZ’s head of South-east Asia research, Ms Chua Chor Hoon, added: ‘As the economy has not recovered, and many have taken pay cuts or were retrenched, demand, especially in the mass-market segment, is likely to be sensitive to price increases.’