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Private home prices poised to rise despite lacklustre sales
Jul 17, 2012
PropertyGuru.com.sg : By Romesh Navaratnarajah: Conditions in the private property market are still ripe for moderate price growth despite slower sales in the last few months which hit an all-time low for the year in June. According to latest figures released by the Urban Redevelopment Authority (URA), 1,371 private homes were sold during the month, a 19 percent decline month-on-month (m/m) from the 1,702 seen in May. Including executive condominiums (ECs), home sales fell 16 percent m/m and reached 1,725. OrangeTee noted that the weaker numbers did not come as a surprise, given that developers held back many launches in June due to the holiday season, aside from the uncertain global economic conditions. But it said that buyers' appetite for properties, especially in the Outside Central Region (OCR) remains fairly healthy. Png Poh Soon, Head of Research at Knight Frank Singapore, commented that developers continue to be competitive on their bids for well-located sites under the Government Land Sales (GLS) Programme. So far this year, demand for private homes has been robust, with more than 12,000 units sold in 1H2012, added the consultancy. River Isles, a 99-year leasehold project by Qingjian Realty was the top-selling project in June, with 263 units sold or 59.5 percent of the 442 units launched in the month. Alan Cheong, Director of Research & Consultancy at Savills Singapore, said that strong sales at River Isles, which saw a median price of S$835 psf, implies that the mass market is capable of absorbing "that kind of pricing". Among the best-selling projects last month were Sea Esta, 1919, Flo Residence, and Tropika East. Moving forward, Cheong noted that July could see robust sales from several major launches including Parc Olympia, Parc Centros, possibly River Sails and V on Shenton. "Assuming a 25 percent sales rate, the above-mentioned projects alone would add 633 units to the new home sales numbers for July," he said. Meanwhile, Chia Siew Chuin, Director of Research & Advisory at Colliers International, believes that home buying sentiment will remain positive thanks to sustained yet moderated economic growth, rising inflation and low interest rates. Nonetheless, "buying euphoria is expected to ease as pent-up demand is gradually being met. New sales volume is therefore expected to moderate to between 8,000 and 10,000 units for 2H2012. This will bring 2012's total sales number to around 20,000 to 22,000 units". Li Hiaw Ho, Executive Director at CBRE Research, predicts that new home sales could be around 4,000 units per quarter. "While this number suggests a slowdown in sales momentum, the total take-up of new homes for the whole year is likely to reach a record high of 20,000 units." At the same time, Dr Chua Yang Liang, Head of Research for South East Asia at Jones Lang LaSalle (JLL) said: "Previous policy intervention is now starting to work its way through the market and buyers are returning, especially to the CCR (Core Central Region), as landlords become more flexible on pricing and the price gap between the CCR and OCR narrows generating more buying interest." In addition, Singaporeans are also the main drivers of the region's sales volume, "helping to soak up the unsold inventory", he added.