THE bumper private property sales recorded in February were no fluke.
For a second straight month, home hunters defied the weakening economy to buy more than 1,000 units last month.
Property consultants say buyers are attracted to what they regard as good buys in the moderately priced mass market.
Still, they warn that these strong buying levels are probably not sustainable.
Last month, property developers sold 1,220 new private homes, just shy of the 1,332 units sold in February.
It was the first time in over a year that the market has seen two consecutive months with more than 1,000 units sold. Sales for both months were a stunning contrast to the dismal 108 in January.
Another striking figure: First-quarter new private home sales hit 2,660 units, representing 62 per cent of all new homes sold during the whole of last year.
February sales - boosted mainly by two new launches Alexis and Caspian - were the highest since August 2007.
Figures compiled by the Urban Redevelopment Authority also showed 832 new housing units were launched last month, compared with 1,072 units in February and just 204 units in January.
Most units sold last month were in the mass market, along with a few city-fringe small-format apartments at condominiums such as Domus and The Mercury.
HDB upgraders were the hottest group of buyers. CBRE Research said that last month alone, they bought 550 to 600 units at mass market projects such as Caspian, Double Bay Residences, Kovan Residences, Livia, Mi Casa and The Quartz at median prices of $610 per sq ft (psf) to $740 psf.
A survey of first-quarter caveats lodged for this market segment indicated an average price of $695,000, said CBRE Research executive director Li Hiaw Ho. 'This is probably a good time for HDB home owners to upgrade to private property as the price gap between private properties and HDB resale flats has narrowed.'
Said Colliers International director for research and advisory Tay Huey Ying: 'Developers have lowered their price expectations for new launches and generally cut prices of unsold units. Buyers are biting as there is pent-up demand.'
The top three sellers in March were Double Bay Residences, Mi Casa and The Arte. About 85 per cent of units sold last month were priced below $1,000 psf, said PropNex chief executive Mohd Ismail.
The high-end showed some life with 70 units launched and some sales, including one Orchard Scotts unit at $2,220 psf.
But overall, only 100 prime units were launched in the first quarter, or just 4.7 per cent of all units launched, well down from the 39.4 per cent of all units launched in the fourth quarter last year.
Knight Frank director of research and consultancy Nicholas Mak said this was partly due to the retreat of foreigners from the luxury market.
Preliminary data suggests foreign deals stood at 16.8 per cent in the first quarter - a level last seen when Sars badly hit the market in 2003, he said.
Market analysts say it is a good start to the year, but they do not expect the strong buying to continue long-term.
'In the short term, this rate of buying can continue provided developers lower or maintain their prices,' Chesterton Suntec International's research and consultancy head Colin Tan said of March sales.
But in the long term, it is not sustainable, he said. 'The last time the market sold so many new units (14,811 units) was in 2007. That was when the deferred payment scheme was available. And it has since caused indigestion in the top end of the market.'
Unless the Singapore economy and employment market improve significantly this year, only 6,000 to 7,000 new private homes are expected to be sold, said Mr Mak.
He said healthy demand for mass market homes is likely to continue only as long as average HDB resale prices do not fall by more than 7 per cent year on year.
'Many in the mass market segment are buying now and banking on their future earnings to service their loans as they are afraid of missing the boat,' said Mr Mak.
Source: Straits Times, 16 April 2009