Sales of new private homes down again

Source : Straits Times – 17 Nov 2009

SALES of new private homes plunged last month to just 811 units – well down on September’s numbers and a clear sign that the Government’s cooling measures have taken hold.

The decline also marks the third straight monthly contraction since August.

October’s sales were down from the 1,143 units sold in September and 1,805 in August, although they were still about six times the sales done in the same month last year, according to the Urban Redevelopment Authority yesterday.

‘Although the number of units launched and sold in October was the lowest since January, it should not be treated with alarm as it reflects that the property market is subsiding into a more sustainable level of activity,’ said DTZ’s head of Southeast Asia research Chua Chor Hoon.

October’s sales came close to the average monthly take-up of 845 units since June 2007, she said.

Property experts were already expecting the slump as sales at launches started to slow down not long after the Government introduced measures to calm the market in mid-September.

Price resistance has also set in, particularly for mass market homes, they say.

Developers launched only 566 units last month, a far cry from the 1,413 launched in September.

About 60 per cent of the launches were prime projects, which accounted for slightly more than one-third of the sales. There were no new major mass market launches.

PropNex chief executive Mohamed Ismail believes the pent-up demand that accumulated during the financial crisis has largely been met. He noted that 66 per cent of the units sold last month were mid-range homes that went for between $1,000 psf and $1,999 psf – a result of developers selling smaller units at higher prices per square foot.

One of last month’s best sellers was Far East Organization’s 278-unit Cyan in Bukit Timah Road. It launched 90 units and sold 81 at a median price of $1,821 per sq ft.

Last month’s figure brings sales so far this year to 13,639 units, just 8 per cent short of the record 14,811 units sold in 2007. Total sales of new homes will likely surpass the 2007 total, experts say.

Jones Lang LaSalle said the Government’s measures to curb speculative behaviour seem to have taken effect, going by sub-sales, which fell to 7.9 per cent of total sales last month from the 12 per cent recorded in September.

Still, the low level of new launches last month suggests that developers were more affected by the measures than buyers, say experts.

‘While one would expect developers to capitalise on the buying trend, they were surprisingly more cautious and anticipated a bigger demand pull-back,’ said Jones Lang LaSalle’s head of research for South-east Asia, Dr Chua Yang Liang.

It suggests the market could be ‘closing in on its peak as developers are no longer as confident of the sustainability of the current market movement’, he said.

New home sales are expected to slow this month and next to between 600 and 700 units. Dr Chua expects sales of non- landed homes to contract by a further 10 per cent to 20 per cent.

But if the rise in house prices continues to surge ahead of economic fundamentals, tougher anti-speculative measures could be introduced. These could include a capital gains tax, perhaps for those who flip within a two-year period of the first purchase, added Dr Chua. Ngee Ann Polytechnic lecturer Nicholas Mak believes the next wave of buying may come when the two integrated resorts open next year.

Home prices, said CBRE Research executive director Li Hiaw Ho, are likely to ‘hold firm at current levels’, though the imminent launch of Marina Bay Suites will give a good indication of how the prime and high-end segment will perform.