City&Country: Singapore-- Behind September’s ‘bullish’ new home sales

Singapore’s new home sales figures in September 2011 have beaten the predictions of property pundits. In the lead up to the release of the figures on Oct 17, property consultants had estimated the September numbers to be from 1,000 to 1,400 units. But the figure rang in even higher at 1,631 private new homes sold — better than the 1,351 (+20.7%) and 1,398 units (+16.7%) achieved in August and July respectively.

According to Li Hiaw Ho, executive director of CBRE Research, this brings the number of homes sold in 3Q to 4,380 units. For the first nine months of the year, the figure came to 12,419, which was higher than the 12,051 units sold in the same period in 2010. 

The high September volume was mainly supported by mass-market and HDB upgrader-type projects. The top seller was Sim Lian Group’s A Treasure Trove at Punggol Central with 683 units of a total of 882 in the project sold at a median price of S$915 psf. Far East Organization’s EuHabitat in Jalan Eunos was another big seller. Launched in August, another 138 units were sold in September at a median price of S$1,191 psf, bringing its total sales to 560 units (out of a total of 748). 

Frasers Centrepoint’s 493-unit Boathouse Residences at Upper Serangoon View registered a total of 276 sales after another 86 units were sold in September at a median price of S$924 psf. Keppel Land’s The Luxurie at Sengkang Central sold another 70 units in the same month, bringing its total sales to 216 units in the 622-unit condominium. The median price achieved was S$1,042 psf. As for Hong Leong’s The MeyeRise, a freehold project in Meyer Road, 108 units out of a total of 239 were sold at S$1,789 psf.

Meanwhile, a total of 433 executive condos (ECs) were sold in September, compared with 290 in August. Most property consultants attribute the boost in EC sales to the government’s move in August to raise the household income ceiling for EC buyers from S$10,000 to S$12,000 per month. Arc At Tampines, the first EC project launched after the announcement, registered 233 units sold at a median price of S$734 psf. RiverParc Residence in Punggol sold 90 units (S$685 psf), bringing total sales to 483, while Blossom Residences in Bukit Panjang sold 52 units (S$706 psf) on top of 361 units sold earlier.   

However, beneath the strong headline monthly figures, the take-up rate at new launches have slowed, says Sai Min Chow, property analyst at Nomura Equity Research in his report.

“We believe caution is warranted,” he says, citing two main reasons: first, slower take-up rate of 62% at new launches in September (compared with 79% in August and 77% a year ago). Second, unsold inventory continues to build up with cumulative units of private homes launched but unsold up 6.4% m-o-m, and 49% y-o-y last month.

Overall, the 20.7% increase in September’s new home sales compared with August was more the result of a 63.2% m-o-m increase in new launches, and “our assessment of a significant build-up of unsold condominium inventory to end-2012F remains unchanged”, adds Sai in his Oct 17 report.

A developer who declined to be named agrees with the report on the build-up in stock of unsold units. “Getting the first 25% to 30% of the units sold is not a problem,” he says. “Reaching 50% to 60% is now a bit of a struggle, and thereafter, sales seem to plateau.” He is concerned that even as the build-up in unsold units at new launches increases, the government continues to be relentless in its release of new sites through the government land sales (GLS) programme. “It may not be evident now from the monthly sales figures, but it could lead to an oversupply problem a year or two from now,” he says. “But it all depends on the economy.”

The government is releasing four sites yielding approximately 1,900 units (from URA and HDB) on top of the 13,825 units already released through the GLS this year, notes DMG & Partners Research in an Oct 18 report. Of the four, a residential site in Alexandra Road is launched for sale via the confirmed list, which is a prime site located near the Redhill MRT station with a potential to yield 545 units. On Oct 27, the other two private residential sites will be released through the confirmed list and are expected to yield 35 landed homes in Bukit Panjang (Chestnut Avenue) and 540 units in Punggol Central. Another 770 EC units in Seng Kang will be released on the reserve list.

Anticipated significant launches in the pipeline for 4Q include Sim Lian’s 452-unit Parc Vera in Hougang Avenue 7 near the Hougang MRT station and the Hougang Central bus interchange. Another is the 180-unit freehold condo, Regent Residences in Serangoon Road, with exclusive one- and two-bedroom apartments. The project is said to be near the Boon Keng MRT station.

Coming up sometime in November are two major 99-year leasehold condo projects in the Bedok area. One is the 577-unit development by sister companies, UOL Group and Singapore Land located in Bedok Reservoir Road and fronting the Bedok Reservoir Park. The development also includes 24 strata semi-detached homes. Another is CapitaLand’s 583-unit Bedok Residences at Bedok Central, which will contain eight 15-storey blocks sitting on top of a 3-storey shopping mall, with a direct underpass to the Bedok bus interchange and the Bedok MRT station.

Developers are monitoring the impact of the eurozone crisis on Singapore’s economy to time their project launches, says CBRE’s Li. “Looking at launch-ready projects in 4Q and with prices remaining stable, it is unlikely that we will see the same level of take-up as 2Q and 3Q,” he adds. “We expect the total new home sales volume in 2011 to exceed the 14,688 units sold in 2009, but it remains to be seen whether it can outdo the record 16,292 units sold in 2010.”

Cecilia Chow is the editor of City & Country at The Edge Singapore

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 883, Nov 7-13, 2011