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December is usually one of the slowest months for the property market. Some unique dynamics have made this December one of the best times for developers and property sellers. As Singaporeans have been advised to defer all travel until the global coronavirus situation is under control, more locals have visited showflats during the holiday season, which may have helped developers sell more homes last month. Further, those who have been sitting on the side-lines are entering the market now as prices of homes are expected to appreciate further this year in tandem with a post-pandemic economic recovery.
According to the Urban Redevelopment Authority (URA) sales survey, new home sales remained brisk in December, rising by 57.2 per cent month-on-month (m-o-m) to 1,217 units. Including Executive Condominiums (EC), new home sales rose 53.9 per cent m-o-m. Compared to a year ago, sales excluding ECs climbed 126.2 per cent.
The strong buying momentum pushed new boundaries as the sale of new private homes in December 2020 surged to its highest level for the month in eight years. The previous record was in December 2012 when 1,410 new homes were transacted.
New home sales were mainly driven by two key launches last month – the 640-unit Clavon which sold 473 units and 660-unit Ki Residences at Brookvale which moved 172 units. The other top-selling projects include Parc Clematis, Treasure at Tampines, Jadescape and Piermont Grand. The 74-unit Phoenix Residences was also launched in December.
Outside of Central Region (OCR) accounted for the bulk of 75.9 per cent of the total new home sales (excluding EC). 19.1 per cent of sales were in the Rest of Central Region (RCR), and 4.9 per cent were in the Core Central Region (CCR).
While demand for homes is still high, fuelled by low mortgage rates and ample liquidity from the massive stimulus programs, supply may start declining this year. Developers have been paring down their unsold stock as many projects sold units consistently throughout the pandemic. The number of planned launches may decrease this year as many mega projects have been launched over the past three years. New land supply in the suburban and city-fringe areas has dipped very low since the end of the last collective sales cycle. Government land sales have also been moderated over the past few years.
The imbalance between supply and demand may keep home prices firm and even rising in some popular areas where new supply is limited. Prices at many recent launches have already increased last year despite the pandemic and macroeconomic uncertainties. New home prices are expected to move higher this year, possibly by 2 to 5 per cent.
The total number of new home sales in 2020, excluding EC, is 10,024 units based on the flash estimates. The final figure could be lower when aborted units are accounted in the final figures released in the Q4 2020 URA real estate statistics data. Therefore, the total number of new home sales could be on par with the 9,912 units sold in 2019 and above the 8,795 units sold in 2018. For 2021, around 9,000 to 10,000 new homes excluding ECs could be sold.