New home sales come close to 2007 levels

Source : Straits Times – 15 Dec 2009

WITH the year nearly over, it is clear that nearly as many homes will be sold this year as in the boom year of 2007.

CB Richard Ellis (CBRE) predicted yesterday that as many as 14,500 new homes may be sold once the final tally is in for this year – second only to 2007’s record take-up of 14,811 units.

But caveats lodged from Jan 1 to Dec 11 showed that the total value of property sales this year is running at only 58 per cent of that in 2007, said CBRE.

It said this was because mass market and mid-tier homes dominated the market this year, unlike in 2007 when high-end homes stole the limelight.

Also noteworthy: the fast-rising popularity of small-format apartments of 500 sq ft and below. So far this year, 540 of these apartments have been sold, more than double the 221 units sold in 2007.

Most projects with small units were sold out within a few days of their launch as each unit was ‘very affordable’ at between $300,000 and $600,000.

‘As developers whet the appetites of enthusiastic home buyers by supplying nearly 12,000 new homes for sale in the first nine months of the year, they ran short of supply of mass market projects by the fourth quarter,’ said CBRE.

In the fourth quarter, most launches were prime ones, pricing out buyers with smaller budgets. The Government’s warning that the recovery might not be sustainable also cooled buying fever, CBRE said.

With a fortnight left in the year, CBRE estimates total fourth quarter sales of new private homes at 1,700 units, putting combined sales for November and December at 889 units as October sales were 811 units, down from the 1,143 sold in September.

With no major launches to drive up November and December sales, this period was always expected to be slower.

Earlier, some consultants had tipped a new record this year. This now looks unlikely as the market has slowed markedly in the fourth quarter, said Knight Frank’s executive director for residential, Mr Peter Ow. ‘We may not breach 2007’s record but it is still a spectacular number as the sales were achieved mostly in a seven- month period from March to September.’

Nevertheless, there is growing market confidence, particularly with next year’s opening of the two integrated resorts, experts said.

The first half of next year will see a wider spread of project launches, from the mass market ones to the city-fringe projects and prime ones, said CBRE executive director for residential Joseph Tan.

‘For mass market and city-fringe 99-year leasehold projects, prices are likely to cross the $1,000 psf barrier because of their near-city location or if they are near an MRT station.’

Prime projects in the pipeline include Ardmore 3 and those on collective sale sites of Grangeford and Hillcourt, said CBRE. It expects 8,000 to 10,000 sales, with prices rising by 5 per cent to 10 per cent.