SINGAPORE, 15 February 2023 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on the developer sales in January 2023.
New private home sales surged 130% m-o-m in January 2023 to 391 units, fuelled by the robust sales in Sceneca Residence in the OCR, which saw 157 units sold, contributing to 40% of the total month sales. The suburban project is the first major non-landed private residential launch (excluding ECs), after the Sep 2022 cooling measures.
In aggregate, the OCR accounted for 47% of sales in January, while the CCR and RCR accounted for 40% and 12%, respectively. Units launched in January multiplied by almost 10 times from December’s low base of 45 units.
Contrary to the OCR and CCR, the RCR registered a decline in sales in January; but this is most likely due to RCR seeing only 105 new units launched, on the back of a dearth of new project launches. The spike in sales for the OCR can be attributed to the fact that 270 new units were launched in this segment, compared to just 35 and 105 new units in the CCR and RCR, respectively.
Our analysis of the caveats showed that, in terms of buying demand by unit size in the primary market within the OCR, demand rose for units sized 1,000 sq ft and below in January (83% of total OCR units), compared to December (27%). The share of private homes sold in the OCR in January priced at $2 million and below doubled at 84%, compared to 42% in December, driven by demand for affordable units in the OCR due to tighter financing conditions.
Share of foreign purchases in private homes climbed to 9.2% in January, up from 8.3% in December, as the border reopens. Moving forward, we expect share of foreign purchases to inch up in 2023, on the back of China’s reopening, with demand from Mainland Chinese for private homes in Singapore expected to gradually recover in 2023. In addition, the potential return of well-heeled Mainland Chinese investors would likely drive demand for private homes, especially in the prime and city fringe areas.
In the OCR, sales were contributed by Sceneca Residence (157 units), which contributed to 85% of the segment’s sales. In the RCR, sales were contributed by projects such Riviere (13 units), The Landmark (10 units) and Liv @ MB (6 units), accounting for 60% of the segment’s sales. In the CCR, sales were contributed by projects such as Leedon Green (21 units), Klimt Cairnhill (17 units) and One Holland Village Residences (16 units) which accounted for 34% of the market segment’s sale in the month.
Among the top 10 best-selling projects islandwide, six were located in the CCR, another two were located in the RCR, with the remaining two located in the OCR. In addition, price pressures were noticeably more muted among the 10 top-selling projects in January. Among the top 10 top-selling projects, only three projects (Leedon Green, Riviere and Perfect Ten) saw higher monthly median sales price in January, while six projects saw declines.
On the whole, we expect overall housing demand to moderate in 2023, on the back of rising interest rates and tighter financing conditions that increase borrowing costs. Nonetheless, the property market is supported by a tight labour market and healthy household balance sheets. With a slowdown in the sales momentum, the supply-demand dynamics are now more balanced. In addition, we expect sales momentum to gradually pick up in the coming months, especially after the Lunar New Year lull period, as developers pick up the pace of launches.
Post-Budget 2023, higher marginal Buyer’s Stamp Duty (BSD) rates will now apply for properties priced above S$1.5 million. This would egg developers to cap their property quantum at a level to move sales. In any case, most buyers and investors looking at units priced at around S$2 million or lower are unlikely to be impacted much or deterred by the new BSD rates.
Some buyers considering luxury properties may defer their purchases given the added transaction cost, but we expect them to enter the market eventually, given the relative price attractiveness of the prime segment. In addition, for buyers that are already subjected to ABSD, the increase in overall transaction cost is marginal.
We maintain our price growth projection of 1-3% for 2023, down from 2022’s 8.6%, amid projected slower economic growth for this year, as well as ongoing macroeconomic headwinds.
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