(SINGAPORE) The number of new private homes sold in August 2009 fell sharply to 1,699 as pent-up demand eased and developers raised the prices of some newly launched projects.
The slowdown, which was largely expected, came on the back of a record month - 2,772 new homes were sold in July, the highest figure since the authorities started releasing monthly numbers in mid-2007.
The falling sales, combined with Government measures to cool the private residential property market announced on Monday, means that analysts are now expecting substantially lower monthly sales for the rest of the year.
Citing signs of increased speculative activity and a 'significant' rise in private home prices since June 2009, the Government two days ago unveiled a slew of measures including disallowing the interest absorption scheme (IAS) - which helped revive home sales earlier this year after the global financial crash - and the similar interest-only housing loans. The Confirmed List land sales will also be reintroduced from the first half of next year.
'As the new measures are likely to affect market sentiment in the immediate future, the residential sales momentum is likely to moderate in the fourth quarter and further price increases will be checked,' said Li Hiaw Ho, executive director of CBRE Research.
However, most analysts are maintaining their forecasts for transaction volume for the whole of 2009 as they had already factored in the expected decline in sales from August onwards following the peak in July 2009.
Most analysts now expect only about 1,000-1,200 new homes to be sold per month from September to December - although some forecasts are as low as 500 units a month.
CBRE, for example, said that new home sales for the full year should exceed 14,000 units - with a good chance of surpassing the market peak of 14,811 units in 2007. To date, 11,845 homes have been sold in 2009, a large jump from the 4,300 units sold in the whole of 2008.
The two main reasons cited by analysts for the coming slowdown are buyer fatigue and resistance to increased asking prices.
'Sensible pricing and a pent-up demand from the financial crisis led to the astronomical figures in the last few months,' said PropNex chief executive Mohamed Ismail. 'That demand is probably waning, resulting in the 39 per cent drop in units transacted from the previous month (in August).'
But with the measures announced on Monday, prices are now likely to stabilise. Citigroup analyst Wendy Koh, for example, thinks that the new measures could moderate future price increases.
While the mass market segment was the star performer in July 2009, the mid-tier RCR (rest of central region) segment garnered the highest launch and sales volume in August 2009, boosted mainly by Trevista which sold 413 units out of the 590 launched at a median price of $943 per square foot (psf).
Some 722 units were sold in the RCR. By contrast, 449 units were sold in the prime Core Central Region, while 528 new private homes were sold in the Outside Central Region, which is a proxy for suburban mass market locations.
Developers launched 919 units in the RCR in August 2009, up 71 per cent from July 2009. This is the highest number of mid-tier units launched since URA started releasing the monthly data in June 2007. Developers are likely to have been motivated by their desire to ride on the buying momentum from the mass-market segment, which is filtering up to the mid-tier segment, noted Colliers' director for research and advisory Tay Huey Ying. Developers launched 1,641 new units in all in August.
And although interest for luxury properties remained thin, two transactions at above the $4,000 psf level were recorded for August 2009 - Scotts Square ($4,304 psf) and The Orchard Residences ($4,099 psf). The last time the market saw transactions at above the $4,000 psf mark was in May 2008 when four units at Scotts Square were sold at prices ranging from $3,779 to $4,612 psf.
Source: Business Times, 16 Sep 2009
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