Friday, July 16, 2010

Private home sales dip

World Cup, school holidays, lack of supply among reasons cited for drop

Private home sales continued to slow last month, falling to below the 1,000-unit mark for the first time this year.

Data from the Urban Redevelopment Authority (URA) showed that only 847 new units were sold last month – the lowest number of private home sales so far this year.

The figure is 22-per-cent lower than the 1,083 homes sold in May.

Yet, analysts seemed unperturbed by the softening trend, with some citing the World Cup fever and the month-long school holidays as among the reasons that contributed to the lower sales last month.

“Demand is starting to stabilise, reaching a more sustainable level,” said Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic.

Still, some analysts believe that the latest figures may not suggest that demand for private homes have cooled down. Instead, they attributed the decline in sales to the lack of supply as reflected by the drop in the number of new units launched.

Last month saw a total of 1,010 units launched compared to 1,134 units launched in May and a hefty 2,084 units launched in April.

This may have resulted in buyers holding back their purchases as they wait for more options to become available through future launches, analysts said.

“I think the developers couldn’t launch enough of the mass-market segment as they have exhausted most of their earlier sites and cannot get new sites secured quickly enough for it to be launched for sale,” said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.

ERA Asia Pacific associate director Eugene Lim reckoned that the decline in the number of property launches was because developers had held back due to jitters arising from the euro zone crisis.

Meanwhile, about 51 per cent of the total units sold in June were located in the suburban areas with 429 units sold there, among which are The Minton and Waterfront Gold.

Homes located in the city and prime districts also did well, totalling 143 transactions for the month. However, home sales in the city fringes declined with only 275 units sold out of the 445 units launched there.

Ms Tay Huey Ying, director for Research and Advisory at Colliers International, said this may be because price points in the area had risen by about 18.3 per cent in the first half, based on URA flash estimates.

That is higher compared to the core central region which gained 9.7 per cent and outside central region which increased by 10.3 per cent.

While there was a drop in the sales of luxury homes, the price points for last month were higher than in May, said executive director of CBRE Research Li Hiaw Ho.

The number of units sold in the first half of the year totals 8,158, said CBRE.

Analysts said monthly sales in the coming months could average between 900 and 1,000 units and total home sales for the year could be in the range of 12,500 to 14,000 units.

There could still be a bright spot this month as market watchers expect better home sales as developers gear up for more launches ahead of the Hungry Ghost festival in August.

The Government’s upward revision of its gross domestic product growth forecast to between 13 and 15 per cent for the year may also help improve sentiment among home buyers, they said.

Source: Today, 16 Jul 2010

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