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New home sales maintained above 1,000 units for third month in row
Demand for new private homes remained robust as sales volume maintained above 1,000 units for a third consecutive month in September. According to the developers’ sales survey by the Urban Redevelopment Authority (URA), new home sales excluding Executive Condominiums (EC) rose higher by 5.6 per cent from 1,258 units in August to 1,329 units in September. This is the highest monthly sales since July 2018 when 1,724 units were transacted. Including EC, sales increased 5.8 per cent to 1,385 units from the 1,309 units sold in the preceding month. On a year-on-year basis, the number of private home sales (excluding EC) was 4.6 per cent higher than the 1,270 units sold in September 2019.
Private homes excluding EC in the Rest of Central Region (RCR) and Outside of Central Region (OCR) formed the bulk of purchases last month. 64.6 per cent of the private homes (excluding EC) were in the RCR while 29.0 per cent were in the OCR and 6.3 per cent were in the CCR. The best-selling projects in September were Penrose, Treasure at Tampines, Jadescape, The Garden Residences, The Woodleigh Residences, The Florence Residences, Verdale, and Daintree Residence.
Domestic home buyers continue to be pouring into the market as the proportion of Singaporean purchases hit an 11-year high last month. According to URA Realis data, Singaporeans accounted for the bulk of non-landed new purchases with 1,070 transactions, constituting 87.4 per cent of the 1,224 new non-landed home sales in September. This is the highest monthly proportion of Singaporean purchases since April 2009 when 87.7 per cent of non-landed new home sales were inked. Last month, Singapore Permanent Residents (PR) bought 118 non-landed new homes while non-PRs bought 35 units.
Singapore properties are still hot amid the pandemic. The robust sales inked over the past few months could be attributed to strong underlying demand from local buyers. Many Singaporeans especially high net worth individuals have been looking out for value-assets to grow their wealth and are planning to ride on the wave of market recovery. They may feel that it is a good time to enter the market now since prices will likely rise after the pandemic and Singapore’s economy is positioned for a gradual recovery with many sectors being reopened in recent months. The housing stock in many mega-launches is diminishing which may have stoked the urgency in some buyers to ink a unit now.
Sales at many mega projects excluding EC developments remained healthy despite the pandemic and cooling measures. Many mega projects (more than 500 units) that were launched before the pandemic from January 2018 to December 2019 sold more than 50 per cent of their entire project to-date. Of the 21 mega projects, more than 15,000 private homes were sold collectively from January 2018 to September 2020. The cumulative unsold units from these 21 projects seemed to be fast diminishing, dipping from 9,460 units in December 2019 to 5,460 units in September 2020. Given the steady pace of sales, most mega-projects could be fully sold by next year.
We may see stronger real estate activities during the year-end than in previous years, which may mitigate the adverse impact of the new regulations imposed on the reissuing of options to purchase (OTPs). To encourage financial prudence among buyers, property developers are now restricted from re-issuing OTP to the same buyer of the same unit within 12 months after the expiry of the earlier OTP.
As most Singaporeans will not be travelling overseas this year due to the coronavirus and global travel restrictions, some may spend their holidays visiting show flats or attending property seminars. We estimate that around 2000 to 2,500 new homes could be sold in Q4, bringing the total new sales to be around 8,500 to 9,500 units for the whole of 2020.