Oct home sales dip, but prime area defies mood of caution

Source : Business Times – 17 Nov 2009

The number of private homes that developers launched and sold in October slowed to their lowest levels since housing sales began their revival in February, according to latest official figures. While the outcome was expected, the big question is how long it will take for home sales to rev up again.

Buyers, especially in the price-sensitive mass-market segment, had begun to be fatigued by price increases in the third quarter – even before the government acted on Sept 14 to cool the market. Developers are also running out of mass-market projects which are launch-ready.

‘Everybody’s more cautious now,’ said Knight Frank chairman Tan Tiong Cheng, summing up the current mood among buyers and developers.

DTZ executive director (consulting) Ong Choon Fah said: ‘Buying is likely to continue to be slow for the rest of the year. There’s not much to launch; and people are away. Activity will probably return after Chinese New Year.’

While developers of a few projects are expected to proceed with launches soon – including Marina Bay Suites and City Developments’s new condo on Thomson Road – others have decided to postpone their launches until Q1 next year or even later, when they hope there will be clearer signs confirming the recovery in the Singapore economy that will see buyers emerging from the sidelines again.

Data released by Urban Redevelopment Authority yesterday showed that developers sold 811 private homes in October, down 29 per cent from September’s sales of 1,143 homes. This is the third consecutive monthly decline after home sales peaked at 2,772 units in July.

In the first 10 months of this year, developers have sold 13,639 units. Views in the market are mixed whether developers will manage to sell another 1,172 units in the final two months of 2009 to match the record of 14,811 units in 2007.

The 566 units developers launched in October was 60 per cent lower than in the previous month.

The Core Central Region (CCR) – where higher-priced homes are located – fared relatively better in October than the Rest of Central Region (RCR) and Outside Central Region (OCR).

CCR saw a doubling in sales from 152 units in September to 311 units in October; the number of private homes launched in the region also increased 67 per cent over the same period.

In contrast, the number of units launched as well as sold by developers fell in the other two regions. For instance, the number of homes sold in OCR fell 55.2 per cent month on month to 251 units in October. And the number of homes launched in RCR declined to just 40 units in October from 631 in September.

Last month, a total of 250 units were sold in the $1,500 psf to $2,000 psf range, accounting for 31 per cent of total sales in October and representing a big jump from the 92 units sold in this price range in September, Colliers International research director Tay Huey Ying noted. ‘This shows that as of October, filtering-up of demand from the mass-market to the high-end has not been derailed by the September cooling measures,’ she added.

CB Richard Ellis executive director Li Hiaw Ho noted that interest in luxury projects continued in October despite the slowdown felt in the rest of the market. ‘ A unit at Boulevard Vue sold at $4,150 psf; a unit of Seven Palms fetched $3,429 psf in October after six units were sold in September at $3,091 to $3,353 psf. Over at Nassim Park Residences, five units were sold last month at a median price of $3,089 psf following the sales of nine units in Q3 at $2,800 to $3,450 psf,’ he added.

Jones Lang LaSalle’s head of SE Asia research Chua Yang Liang said the impact of the September announcement was felt most in OCR and RCR as these markets were driven mostly by HDB upgraders who are more sentiment driven.

October’s top-selling project was Far East Organization’s Cyan at Bukit Timah (81 units transacted at a median price of $1,821). Other chart toppers in CCR last month included Trilight (58 units) and Lincoln Suites (53 units) – both in the Newton area.

In RCR, the top sellers included Suites @ Guillemard (66 units) and City Loft (40 units). Both projects featured shoebox units. In OCR, sales were contributed mainly by Hundred Trees in West Coast (52 units) and Mi Casa in Choa Chu Kang (43 units), noted Savills Singapore.