SINGAPORE, 17 April 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 March 2023.
New private home sales (excluding ECs) climbed 13.6% mom in March 2023 to 492 units, fueled by the sole new project launch in the month. The launch of The Botany at Dairy Farm in the OCR saw 184 units moved, which contributed to 37% of the total month sales. The OCR accounted for about half (47%) of total sales while the CCR and RCR accounted for 40% and 13%, respectively. Units launched rose by 43% mom in March to 573 units, higher than February’s 401 units, which translates to a lower take-up rate of 86% in March compared to 108% in February.
Amid a dearth of new launches, both the CCR and RCR saw lower sales activity in March. Nonetheless, the CCR recorded an overwhelming take-up rate of 481% (197 units sold, 41 units launched). The increased attention on value buys in the CCR have led to buyers flocking to this segment, where sales were contributed by projects such Leedon Green (26 units), Pullman Residences Newton (21 units) and Hyll on Holland (18 units) accounting for 33% of the segment’s sales. In the OCR, sales were contributed by The Botany at Dairy Farm (184 units), which accounted for 80% of the segment’s sales. In the RCR, sales were contributed by projects such as The Landmark (24 units), Riviere (9 units) and Piccadilly Grand (8 units) which accounted for 63% of the market segment’s sale in the month.
Among the top 10 best-selling projects islandwide, eight were in the CCR, another one was in the RCR, with the remaining project (The Botany at Dairy Farm) located in the OCR. Prices of new homes were noticeably firmer in March. Seven of the top 10 projects (Leedon Green, The Landmark, Pullman Residences Newton, Hyll On Holland, Klimt Cairnhill, Peak Residence and One Bernam) saw higher median sales price in March as compared to four projects in February. These seven projects saw prices rose by 2.6% mom on average in March, while two other projects saw prices decline by 2% mom on average. As unsold inventory gets pared down, developers are emboldened to raise pricing in accordance with sustained market demand.
However, the higher marginal buyer stamp duty rates announced in Budget 2023 have moderated prices somewhat. The share of new private homes sold which were priced S$1.5 million and above declined to 72%, compared to 95% in February. Developers are likely to swing towards 1 and 2-bedroom units for new projects to limit the price quantum and psychological impact of higher buyer stamp duties for mainstream buyers. Even in the secondary market median prices of homes sold fell by 3% mom in March after rising in the first two months of the year.
The share of foreign purchases for overall (primary and secondary) non-landed homes fell for the second straight month in March to 6.0%, following 8.3% and 7.7% in January and February, respectively. However, this belies the fact that foreign demand has risen steadily from 72 units in December 2022 to 94 units in March 2023. While China has rolled back on several COVID-19 restrictions, it may take some time for foreign demand to recover more significantly. The location of new project launches would also have a bearing on the growth of foreign demand versus local demand; fringe and suburban project launches in recent months are likely to draw more local buyers.
We maintain our forecast of 8,000 to 9,000 new home sales for 2023 on the back of a busy launch calendar for the rest of 2023. However, risks are skewed to the downside as momentum in the public resale market slows while financing and borrowing costs remain restrictive. The rental market is coming under pressure from the ramp-up of completions this year and in 2024, which would subsequently affect the sales market. Pricing momentum remains positive for new project launches due to high land and construction costs. Amid mounting economic headwinds, overall private home prices are projected to rise by a sustainable 5-7% in 2023, following 2022’s 8.6% growth.
ENDS
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