Wednesday, November 16, 2011

Dip in Oct home sales not seen as sign of softening

Business Times: Wed, Nov 16
(SINGAPORE) Even as private home sales dipped for the month of October, analysts agreed that this did not signify a softening in the market, in the light of September's spike.

According to Urban Redevelopment Authority (URA) figures, developers sold 1,387 private homes, excluding executive condominiums (ECs) in October, down 15 per cent from 1,631 units in September.

Taken against the backdrop of July and August data - 1,398 and 1,351 private homes sold respectively - October's transactions are still considered relatively strong, with the mass market as the driving force, said Mohamed Ismail, chief executive of PropNex Realty. 'Home buyers are now more price sensitive, as long as the new launch prices are below $900 psf, there will be a good demand for HDB upgraders,' he said.

'The fact that the total number of units sold (1,387) exceeded the total number of units launched (1,337) in October bears testimony to the strength of the underlying demand, which continued to benefit from, amongst others, the low interest rate environment, the high liquidity in the market, and real estate's attractiveness as a hedge against inflation,' noted Colliers International's director of research and advisory, Chia Siew Chuin.

Developers sold 251 ECs - a public-private housing hybrid - in October, a 42 per cent drop from 433 units in September. As a result, developers' total sales (including ECs) eased 20.6 per cent month-on-month to 1,638 in October.

In the first 10 months of the year, developers sold 13,688 private homes and 2,702 ECs. Compared with the 13,117 private residential units sold between January and October 2010, this reflects the firm underlying demand for homebuyers and the resilience of the market, said Credo Real Estate executive director, Ong Teck Hui.

For the whole of last year, developers sold 16,292 private homes and 1,052 ECs.

Top sellers in October included Parc Vera at Hougang (144 units sold at a $840 per square foot median price), Regent Residences in Serangoon (128 units at $1,321 psf median price), and Este Villa, (121 units at $614 psf median price). EC, Arc at Tampines sold 149 units at a median price of $729 psf.

The priciest unit sold by a developer in October was a unit at Scotts Square, which fetched $4,334 psf.

Colliers International's analysis showed that about 43 per cent of the 1,387 private homes sold by developers in October were priced at $1,000 psf or less.

Mass-market homes in the OCR (outside central region) continued to dominate October's launch and sales figures, even though developers released only 682 OCR units in October, down 54.7 per cent. Homebuyers picked up 893 OCR units, down 32.4 per cent from September.

While monthly sales figures remain healthy, Mr Ong observed that the cumulative number of units launched but not sold has been increasing and there is also substantial supply of units in the pipeline to be launched as well.

'In January, there were 4,041 private residential units that had been launched but remained unsold. This figure has risen to 5,379 in October,' he points out. The risk in this, he says, is that should demand shrink during a market downturn, the market may go into oversupply and this may eventually have an effect on prices.'

Looking ahead, analysts expect developers to roll out more projects in the final two months of 2011 to ride on the current buying momentum.

'With the global economic headwind and the seasonal slowdown, market sales activity in November and December could achieve some 900 to 1,200 units per month, bringing the final quarter sales volume to 3,200 to 3,800. The full year sales could close at 15,800 to 16,500 units - similar to 2010's level,' said Dr Chua Yang Liang, head of research, South-east Asia at Jones Lang LaSalle.

Expected upcoming launches include CapitaLand's 99-year leasehold, 538-unit Bedok Residences, UOL and SingLand's 577-unit development by Bedok Reservoir, and MCC Land's residential project in Sembawang.

Source: Business Times © Singapore Press Holdings Ltd

Team Marshe
Martin Koh/ Sherry Tang
9383-3992/ 9844-4400

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