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 September 2022.
Developers moved 987 private residential units (excluding ECs) in September 2022, 126% month-on-month (m-o-m) higher than the 437 units sold in the previous month. This was driven by strong sales in the two new launches in the OCR for September – Lentor Modern (512 units sold) and Sky Eden@Bedok (121 units sold), that contributed to 64% of the total month sales.
Newly launched units amounted to 913 units in September 2022, 581% m-o-m higher than August’s 134 units, which translates to a lower take-up rate of 108% in September compared to 326% in August. In aggregate, OCR accounted for 70% of total month sales, while the CCR and RCR accounted for 20% and 10% respectively. The outperformance in the OCR can be attributed to the fact that 763 new units were launched in this market segment, compared to just 100 and 50 new units in the CCR and RCR, respectively.
Our analysis of the caveats showed that, in terms of buying demand by unit size, demand rose for units sized between 700 and 1,000 sqft in September (30% of month’s transaction volumes) compared to August (24%). This was followed by units sized between 500 and 700 sqft at 20% of September’s transaction volumes, compared to previous month at 17%. Buyers are settling for smaller units, driven by affordability constraints due to rising prices and interest rates.
Among the top 10 best-selling projects islandwide, four were located in the CCR, another three were located in the RCR, and the remaining three were located in the OCR. In the CCR, sales were contributed by projects such as Leedon Green (31 units), Pullman Residences Newton (27 units) and Perfect Ten (23 units), which accounted for 41% of the market segment’s sale in the month. In the RCR, sales were contributed by projects such as Riviere (18 units), One Pearl Bank (12 units) and Meyer Mansion (10 units), accounted for 39% of the segment’s sales. In the OCR, sales were contributed by projects such are Lentor Modern (512 units) and Sky Eden@Bedok (121 units), which contributed to 92% of the segment’s sales.
On the whole, the property market is supported by strong household balance sheets and a tight labour market. However, the government introduced a new round of property cooling measures with effect from 30 Sep this year in a bid to moderate demand amid rising interest rates. Looking ahead, primary market sales for whole of this year is expected to moderate to about 9,000 units, down from 13,000 last year, on the back of tighter financing conditions, ongoing macroeconomic headwinds and rising interest rates, with downside risks especially if developers and buyers adopt a wait-and-see approach in the immediate aftermath of the cooling measures.
We also expect more restrained land bidding activity in the months ahead. With a slowdown in the sales momentum, the supply-demand dynamics are now more balanced; the unsold inventory would take about 2.5 years of primary sales to be cleared. Private residential price growth is thus projected to soften to 9% for the whole of this year, compared with 10.6% last year. Price growth expectations for 2023 remain positive although risks are growing amid the multiple economic headwinds.
ENDS
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