SINGAPORE, 17 October 2022 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on the developer sales in October 2022.
Developer sales were markedly lower in October 2022 compared to the previous month. Developers moved 312 private residential units (excluding ECs) in October 2022, 68.4% month-on-month (m-o-m) lower than the 987 units sold in the previous month. This is likely due to a dearth of new major project launches in October 2022 in the immediate aftermath of the cooling measures announced at end-September 2022. These were two new project launches for October 2022 – Enchante (25 out of 25 units launched) in the CCR and Pollen Collection (22 out of 132 units launched) a landed project in the OCR.
In anticipation of a kneejerk reaction to the latest cooling measures from the market, developers refrained from launching new units, while giving the market ample space to digest the new measures. Newly launched units plunged by nearly 90% m-o-m to 102 units in October 2022 from September’s 913 units, which translates to a higher take-up rate of 306% in October compared to 108% in September. In aggregate, the CCR accounted for 54.8% of total month sales, while the RCR and OCR accounted for 26.0% and 19.2%, respectively, which is broadly in line with their share of launch activity in the month. 50 new units were launched in the CCR, compared to just 30 and 22 new units in the RCR and OCR, respectively.
Our analysis of the caveats showed that, in terms of primary non-landed buying demand by unit size, demand rose for “units sized between 1,000 and 1,500 sqft” in October (33% of month’s transaction volumes) compared to September (21%). This was followed by “units sized 1,500 sqft and more” at 11% of October’s transaction volumes, compared to previous month at 7%. In general, buying demand gravitated towards larger units of at least 1,000 sq ft and more, as families placed a premium on bigger living spaces to accommodate live, work and leisure.
Among the top 10 best-selling projects islandwide, seven were located in the CCR, and the remaining three were located in the RCR. In the CCR, sales were contributed by projects such as Perfect Ten (37 units), Pullman Residences Newton (13 units) and Hyll on Holland (12 units), which accounted for 36% of the market segment’s sale in the month. In the RCR, sales were contributed by projects such as Riviere (16 units), One Pearl Bank (15 units) and The Landmark (12 units), which accounted for 53% of the segment’s sales. Notwithstanding the tighter financing environment, prices continued to head north in six of the 10 top-selling projects in October. The six projects (Perfect Ten, Hyll On Holland, Haus on Handy, Leedon Green, Fyve Derbyshire and The Avenir) were all located in the CCR and saw higher median sales price in October as compared to September.
While developers exercise pricing restraint for suburban projects as rising interest rates crimp affordability, we expect continued price growth in CCR projects on the back of a few factors. First, the continual border reopening is likely to support foreign buying demand especially in the CCR. Second, the tighter financing climate is likely to have a more muted impact on CCR home buyers. Third, CCR home prices have experienced more moderate growth in this cycle compared to the other two market segments, presenting value opportunities for buyers.
On the whole, the property market remains supported by organic demand growth, strong household balance sheets and a still tight labour market. However, the incessant announcements of layoffs, globally or otherwise, could be a harbinger of deteriorating economic conditions and dampen market sentiment. Looking ahead, we expect primary sales for 2022 to be recorded in the territory of around 8,000 to 8,500 units, a marked decline from 2021’s 13,027 units, on the back of tighter financing conditions, ongoing macroeconomic headwinds and rising interest rates.
Post-cooling measures, overall price growth is expected to stay positive but moderate. We expect about 9% price growth for the whole of this year, compared with 10.6% last year. For 2023, primary sales of about 7,000 to 8,000 units are expected while prices could rise by about 1-3%, barring a further deterioration in economic conditions or the introduction of new cooling measures.
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