Thursday, May 16, 2013

April developer sales of private homes halved

The Business Times  |  16 May 2013
Developer sales of private homes halved last month mainly due to a dearth of big project launches.

[SINGAPORE] Developer sales of private homes halved last month to 1,375 units from the record 2,793 units in March - mainly due to a dearth of big project launches. The numbers exclude executive condos (ECs).

The 1,158 private homes that developers released last month was just a third of March's 3,489 units. As a result, the ratio of units sold to units launched rose from 80 per cent in March to 119 per cent in April. Primary-market sales last month were mainly from earlier launches rather than projects released in April itself.

Two of the top-three selling projects last month were also the best-sellers in March. They are Bartley Ridge (with 154 units sold in April) and D'Nest in Pasir Ris (92 units).

Knight Frank spotted some evidence of price reductions from its analysis of the latest developer sales data released yesterday by the Urban Redevelopment Authority.

Among the top 10 housing projects last month, some units were sold at lower prices than in March.

"For instance," said head of consultancy and research Alice Tan, "the median price of Bartley Ridge was 1.4 per cent lower at $1,278 psf, while that for D'Nest in Pasir Ris was 0.4 per cent lower at $959 psf."

It made sense for developers with existing inventories to consider reducing prices to draw buyers, given the strong competition from an ample supply of upcoming launches, she argues.

In similar vein, Lee Lay Keng, DTZ head of Singapore research, noted that new launches this year would face increased competition from the substantial completions in 2013 and lower investment demand as a result of the higher additional buyer's stamp duty and tighter loan-to-value ratios.

Eugene Lim, ERA key executive officer, also warned that there was pressure for developers to price their projects reasonably, due to the cooling measures and increased supply. "Home buyers are expected to be choosier as they try to find the best-value-for-money investment."

CBRE executive director (residential) Joseph Tan said that the acceptable price limit for 99-year leasehold suburban condos for the upgrader market is $1.5 million - depending on location and amenities. "Projects that were launched above that level saw some resistance."

Savills Singapore research head Alan Cheong noted that projects that were launched last month - such as Spazio@Kovan, Midtown Residences and Sant Ritz - were much smaller in terms of their total number of units compared with those released in March, such as D'Nest, Bartley Ridge and Urban Vista.

Among projects released last month itself, the chart topper was Sant Ritz in Pheng Geck Avenue, with 104 units sold at a median price of $1,494 psf; followed by Jade Residences in Lew Lian Vale, with 79 units sold at $1,592 psf; and Midtown Residences in Upper Serangoon (51 units at $1,479 psf).

The drop in developer sales last month was expected, given the exceptional numbers clocked in March - on the back of pent-up demand from February, when both new launches and sales dried up during the Chinese New Year festive period and following January's cooling measures.

URA figures released yesterday also show that developers sold 172 EC units last month, lower than the 279 units in March.

ECs are a public-private housing hybrid. The top sellers in April were from earlier launches - The Topiary in Fernvale Lane, where 80 units were sold at a $714 psf median price; and 1 Canberra in Yishun (46 units sold at $734 psf). No new EC projects were launched last month.

In the first four months of this year, developers sold close to 6,800 private homes and nearly 900 EC units.

"We foresee monthly sales volume to hover in the range of 1,500 to 2,000 units (excluding ECs) for the next two quarters," said Knight Frank.

ERA's Mr Lim too expects demand to stabilise in coming quarters. "Combining the cooling measures and increasing supply, demand is anticipated to slow down, taking into account that pent-up demand is gradually being met."

Full-year, DTZ predicts developers will sell 15,000-18,000 private homes, a moderation from 2012's record of 22,197 units but still above the annual sales of around 15,000-16,000 units in 2010 and 2011.

Ms Lee said that caps on the number of units in residential developments imposed by the authorities could also lead to a decline in shoebox unit sales by developers, which reached a record high in 2012.

Savills's Mr Cheong expects new homes sales to remain tepid in May. "Most projects slated for launch this month are smallish, and the exception is probably Coral at Keppel Bay (366 units)."

The development is slated for release this week, at an average price of about $2,500 psf, say sources.

Meanwhile, resales of completed private homes remain lacklustre with 539 caveats lodged in April.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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