ST : Home sales last year close to 2007 high

Jan 16, 2010

Home sales last year close to 2007 high

Stellar showing despite plunge last month when just 481 units were sold

By Joyce Teo, Property Correspondent

LAST year closed on a low note for developers when a slowing market saw only 481 private home units sold in December but overall 2009 was a far better 12 months than many had expected.

Buyers returned to the market, gingerly at first and then at a gallop to snap up flats that were more affordable than in the madcap days of pre-crisis 2007.

Government cooling measures slowed it all down later in the year as reflected in December's poor sales - down on November's 601 units and the fifth month in a row of decline.

Yet it failed to take much shine off the year's stellar sales numbers: A total of 14,725 private home units were bought, just 0.6 per cent short of 2007's record tally and about 3.5 times sales in 2008.

'The residential market has proven its resilience by rising above the economic recession in 2009,' said CBRE Research executive director Li Hiaw Ho.

Developers launched 14,103 new private homes last year, surpassing the previous high of 14,016 units in 2007, experts noted.

If buyers had not lapsed on their options, 2009's sales would have set a record of 14,991 units.

The Urban Redevelopment Authority's (URA) monthly sales figures - from which the 14,991 figure is derived - do not include lapsed options.

There's no escaping the impact of the financial crisis. Caveats lodged show that the dollar value of new homes sold last year is only 63 per cent of that in 2007, Mr Li said.

'The lower quantum could be attributed to the dominance of mass-market and mid-tier homes in the 2009 basket, compared to 2007, which comprised largely high-end homes,' he added.

Affordability was a key issue last year with buyers - many HDB upgraders - keen on small units as these have a more palatable price. Some 42 per cent of last year's sales were in suburban areas.

Developers cut prices and unit sizes which helped meet demand, said Dr Chua Yang Liang, Jones Lang LaSalle's head of research, South-east Asia.

It was 'a year of opportunistic buying' as buyers realised that prices had corrected from the peak levels in 2007, said Mr Li.

This started in the mass-market segment in the first half of the year before filtering into the mid-tier and high-end projects in the second half, he said.

Prices started to rise around the middle of the year. Government data showed that prices, which fell by some 18 per cent in the first half of the year, had rebounded by 24 per cent in the second half.

Increasingly frenzied buying from February prompted the Government to step in in mid-September with measures to take the heat out of the market.

Transactions duly fell, with December the fifth consecutive month of sales decline after transactions had peaked in July at 2,772 units.

With buyers holding back, developers launched fewer units last month. Just 734 were launched, down from 923 in November, according to URA data yesterday.

The best seller last month was Far East Organization's The Shore Residences, located opposite Katong Shopping Centre. It launched 136 units and sold 79 for between $1,002 and $1,318 per sq ft (psf).

CapitaLand's Urban Suites also did well in a quiet month, selling 59 units for $2,180 psf to $2,765 psf.

There has been a noticeable pick-up in demand for units priced above $2,000 psf in the second half, though the total number has yet to make an impact.

Overall, the take-up rate of new launches slowed towards the end of last year, said Dr Chua.

He said this suggested that the Government's mid-September announcement of anti-speculative measures had some effect on demand.

While sales were strong last year, demand, especially in the mass market, has become more sustainable, said Dr Chua.

'As such, we do not expect further government measures in the immediate to short term unless transaction volume and prices begin to move out of pace with the larger economic recovery again,' he added.

Consultants expect demand for new homes to moderate to between 7,000 and 10,000 units this year.

CBRE Research is tipping price rises of 8 to 10 per cent, with sales and price momentum to be led by the high-end segment in the first half.

Colliers International expects a more optimistic 12 to 15 per cent rise in prices.