SINGAPORE, 15 August 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 July 2023.
New private home sales (exclude ECs) jumped by fivefold to 1,412 units in July 2023 from the 278 units in June, a stark reversal from June’s 73% mom decline. The sales tally in July is the highest in 20 months (i.e. since November 2021), driven by four new projects launches in the month – Grand Dunman (549 units) and Pinetree Hill (150 units) in the RCR, and Lentor Hills Residences (333 units) and The Myst (127 units) in the OCR – that recorded respectable sales.
The RCR accounted for 59% of total new sales in July 2023, while the CCR and OCR accounted for the remaining 6% and 35%, respectively. Units launched in July rose exponentially to a 2.5-year high of 2,156 units, from June 2023’s 31 units. In comparison to May 2023, which saw the launch of two new projects, take-up rates were broadly similar, seeing a take up of 65% in May and 66% in July. However, these take-up rates are markedly lower than those seen in the first part of the year, which were closer to the 100% mark. There was one new project (Lavender Residence, 17 units) launched in June 2023.
The bulk of the sales in the RCR and OCR were driven by the new project launches. In the RCR, Grand Dunman (549 units) and Pinetree Hill (150 units) contributed 84% of the segment’s sales. In the OCR, Lentor Hills Residences (333 units) and The Myst (127 units) accounted for 94% of the segment’s sale . In the CCR, sales were contributed by projects such The Leedon Green (14 units), One Bernam (8 units), Grange 1866 (8 units) and Klimt Cairnhill (8 units), accounting for 43% of the segment’s sales.
Price pressures have palpably weakened amid the intensified competition. The deluge of launches in July has led to cautious pricing not just among the newly launched projects, but also across projects which were previously launched. Among the top ten best-selling projects, besides the four newly launched projects, three of them (One Pearl Bank, Liv@ Mb and Leedon Green) saw an average increase in median prices of 1.9% mom in July, while three projects saw an average decline in median prices of 2.5% mom.
Post-cooling measures, the share of foreign purchases in private homes fell further to 1.5% in July, following the 2.4% in June and 3.7% in May. In particular, share of foreign purchases fell more noticeably in the RCR segment to 1.5% in July, down from 2.7% in June. We expect foreign buyers to adopt a wait-and-see approach in the coming months, but foreign demand could bottom out by the end of the year.
Amid a tight financing environment, buyers hunted homes with affordable price tags. The share of new units priced at S$1.5 million or below ballooned to 25% in July, following the 4% in June. Likewise, the share of smaller units also rose; the share of units sized at 700 sq ft or below rose to 37% in July, following 26% in June.
Looking ahead, we expect about 2,000 to 3,000 units to be launched in the rest of the year. However, with a noticeably lower take-up rate among recent launches, our full year forecast for primary sales is now lowered to 6,500-7,500 units (from 7,000 to 8,000 units previously). The market fundamentals remain intact: supported by organic demand growth, a tight labour market and robust household balance sheets. On the flip side, the uncertain macro environment and elevated financing costs, coupled with slowing public resale market sales volumes act as a curb on demand and price growth. In addition, market psychology is proving to be more volatile as market momentum slows.
Overall property prices may trade sideways in the second half of 2023 as the tighter financing environment would weigh down on housing affordability, while the still-high construction and land costs would put a floor on pricing. Prices are poised to rise at a more sustainable pace of 3-5% this year, following 2022’s 8.6%. Nevertheless, the overall property market remains fairly stable, underpinned by a relatively tight labour market and organic housing demand.
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