EDMUND TIE’s comments: Developer sales – April 2023
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  • 16 May 2023

EDMUND TIE’s comments: Developer sales – April 2023

SINGAPORE, 15 May 2023 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on URA’s announcement on developer sales in April 2023.

New private home sales (exclude ECs) climbed 80.3% mom in April 2023 to 887 units, the highest in 7 months since September 2022, during which a set of property cooling measures (prior to April 2023’s) was implemented. The sales volume in April was 35.8% higher than that a year ago. New private home sales were fuelled by the robust sales in the 2 new project launches in the RCR, Tembusu Grand and Blossoms by the Park, where a total of 559 units was sold in the two projects, contributing 63% of the total month sales.

Consequently, the RCR accounted for about 71% of total sales in April, while the CCR and OCR accounted for the remaining 23% and 6%, respectively. Units launched rose by 36% mom in April to 779 units, higher than March’s 573 units, which translates to a higher overall take-up rate of 114% in April compared to 86% in March. 

Despite a dearth in new launches in the CCR, new sales rose by 6% mom in April, a reversal from the 11% decline in March. The CCR continued to record the highest take-up rate for the fifth consecutive month at 251% in April. Demand gravitated towards properties in the CCR as homebuyers see higher value in purchasing homes in this segment, especially with the narrow price gap between CCR and RCR.

In the RCR, sales were contributed by Tembusu Grand (354 units) and Blossoms by the Park (205 units), which contributed to 89% of the segment’s sales. In the CCR, sales were contributed by projects such The Atelier (46 units), Pullman Residences Newton (19 units) and Leedon Green (19 units) accounting for 40% of the segment’s sales. In the OCR, sales were contributed by projects such as The Botany at Dairy Farm (12 units) and The Gazania (10 units) which accounted for 43% of the market segment’s sale in the month.

Among the top 10 best-selling projects islandwide, 5 were in the CCR, another 4 were in the RCR, and the remaining 1 is in the OCR. Price pressures were noticeably muted among the 10 top-selling projects in April. Of these, only 4 projects (The Landmark, Piccadilly Grand, Midtown Modern, The Botany at Dairy Farm) saw higher median sales price in April as compared to 7 projects in March. These 4 projects saw prices rise by 3.0% mom on average in April, while the 4 other projects saw prices decline by 2.5% mom on average. Developers are mindful to limit price increases to maintain affordability.

The share of foreign purchases in private homes fell to 5.4% in April, following 6.0% in March. Moving forward, we expect share of foreign purchases to moderate in 2023, amid the more punitive hike in ABSD rates for foreigners (which were doubled from 30% to 60%). Nonetheless, we expect to see sustained demand from the Americans who are exempted from paying the ABSD on the first residential property purchase in Singapore due to the free-trade agreement. With a slowdown in foreign demand, the overall pie for homebuying is expected to shrink in 2023, and developers may push back some of the launches to the second half of this year, especially those located in the prime areas.

The dynamics of the property market are two-tiered; property sales and prices in the secondary market have stabilised in April, given the sombre economic climate and tight financing conditions, while primary market pricing continued to set new benchmark. In April 2023, the median prices of secondary homes were broadly unchanged at S$1,593 psf, while primary median prices rose by 9.6% mom from S$2,273 psf to S$2,492 psf. Nonetheless, the take-up rate for new projects is still highly sensitive to the launch price. Given the pent-up demand and dry powder, attractively-priced projects in mass market locations are likely to see strong initial sales momentum.

Given the highest prevalence of foreign demand (18% share) in the primary CCR market, the impact of the latest cooling measures has been felt most keenly in this segment. In the fringe and suburban markets, Singaporean and PRs account for the overwhelming majority (about 98%) of transactions in recent launches eg Tembusu Grand, Blossoms by the Park and The Continuum. Given the limited ABSD hike of 3-5% points for investment home demand by Singapore Citizens and PRs, we expect fairly buoyant overall demand for new project launches in the fringe and suburban markets in the months ahead.

On the whole, housing demand is poised to soften in 2023, on the back of elevated economic uncertainties and borrowing costs, a softer public resale market and the expected wait-and-see stance in the wake of the recent cooling measures. Primary sales for 2023 are expected to come in at around 7,000 to 8,000 units, sustained by organic housing demand and still healthy labour market conditions. Against the backdrop of macroeconomic headwinds and tighter financing conditions that weigh on housing affordability, prices are likely to increase at a more sustainable pace of 4-6% this year, following 2022’s 8.6%.

ENDS

For further information, please contact:

Seah Li Ching (Ms)

Corporate Communications

DID: +65 6393 2510

Email: liching.seah@etcsea.com

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