ST : Private home sales still going strong

Apr 16, 2010

Private home sales still going strong

1,761 units snapped up last month despite the Govt's cooling measures

By Joyce Teo

SALES of new private homes leapt again last month, with more strong buying expected in the months ahead after the latest hot economic growth figures.

Home hunters picked up 1,761 units last month, up from 1,202 in February, bringing first-quarter sales to a higher-than-expected 4,446 units.

The quarterly total was way above the 1,860 units sold in the fourth quarter of last year, as demand for core city centre projects gathered strength.

Analysts noted that sales last month recovered to almost the level in August last year before the Government intervened to cool the market last September.

This suggests that cooling measures, which include requiring those who buy and sell a property within a year to pay stamp duty, may be losing steam as buying sentiment returns amid improved economic conditions, said Jones Lang LaSalle's head of research South-east Asia, Dr Chua Yang Liang.

In March, developers were just as enthusiastic as buyers, launching 1,790 new private homes, up from 1,161 a month earlier, according to data from the Urban Redevelopment Authority (URA) yesterday.

Launches of prime city projects surged last month, with 76 Shenton in Shenton Way selling out all 202 units on offer - at a median price of $1,900 per sq ft - in a matter of days. The brisk take-up at 76 Shenton was largely due to its location and small units, but not all projects that did well had only small units. At The Vision in the West Coast, for instance, the units start at 818 sq ft.

The 793 units launched in the core city centre was the highest since 2007.

Even more striking: The 701 non-landed units sold set a new record for the highest number of units sold in a month in the area, also known as the core central region, noted Jones Lang LaSalle.

'Demand in this region has so far been largely project-specific but March's performance is testament to a continued growth in the core central region,' said Dr Chua.

Mass market projects also did well last month, with the top seller being The Vision, where 236 units were sold at a median price of $1,050 psf.

The strong sales momentum in the first quarter has spilled over to this month, as seen by the rapid sale of more than 300 units of Waterbank at Dakota over one weekend, noted CBRE Research.

'If the pace of sales continues throughout the year, the total sales of new homes could even be comparable to last year's volume of 14,688 units,' said its executive director Li Hiaw Ho.

He said this week's figures showing stellar 13.1 per cent year-on-year economic growth in the first quarter and the Government's upward revision of estimated full-year growth to 7 to 9 per cent, from 4.5 to 6.5 per cent previously, is likely to mean much positive market sentiment in the coming months.

There will be no shortage of homes to keep the bumper figures rolling. Sizeable launches are expected at sites at Chestnut Avenue, Serangoon Avenue 3 and Lorong Ah Soo, for instance, he said.

DTZ's head of South-east Asia research, Ms Chua Chor Hoon, said low interest rates would entice buyers. 'More foreigners will be attracted to buy after looking at the fantastic GDP growth projections,' she added.

Looking ahead, property consultancy Savills Singapore expects to see more sales of homes priced above $3,000 psf.

Colliers International's director for research and advisory, Ms Tay Huey Ying, said some buyers of mass market projects may show resistance to higher prices, and this may affect sales to some extent.

However, she expects overall buying momentum to be strong this quarter.

But risks may arise in the second half. Dr Chua said the residential market is likely to keep forging forward, especially over the next few months as buyers race to lock in lower bank rates ahead of the expected interest rises by the second half.

But demand could pull back in the second half as higher financing costs set in and as higher prices make the market less appealing to foreign buyers, he said.

Total sales of homes this year could hit 10,000 to 14,000 units, depending on the overall domestic and regional economic performance as well as the aggressiveness of the Government's interventions in the market, he added.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said government land sales would sustain market activity in the short term and even contribute to growth in home prices.

But if the Government keeps providing ample supply of development sites, the result in the medium term would be slower price rises or even a potential glut if there is a sudden economic downturn, he said.

joyceteo@sph.com.sg