ST : Private home sales down

Oct 16, 2010

Private home sales down

Cooling measures seem to have immediate impact, with 911 units sold last month

By Joyce Teo

PRIVATE home sales last month were down sharply from August, suggesting that the recent steps to cool the surging property market had immediate impact.

Developers sold 911 flats last month - down from 1,259 in August - and a substantial part of that was due to heavy demand for one project.

The level of launches was slightly lower, with 1,058 units released last month, from 1,165 in August, according to the Urban Redevelopment Authority yesterday.

While last month's figures were down, in comparison with the preceding months of mostly bumper transactions, they were still fairly robust and brought sales of new private homes for the first nine months to 12,136. This compares with 12,828 units shifted in the same period last year.

Developers sold 14,688 new homes in the whole of last year, just short of the 2007 record of 14,811 units.

The Aug 30 cooling measures introduced tighter lending rules for people with existing mortgages looking to buy another home, and barred owners who plan to buy a HDB resale flat from keeping their private property, including any held overseas.

Experts say the steps managed to dampen demand although the extent of the fall in sales was largely expected.

But marketing agent Jones Lang LaSalle said the move fell short of expectations as cooling measures introduced in September last year had a greater and faster effect in moderating sales volumes.

'The numbers suggest that the initial shock of government policies is over as the market adjusts to a stricter regulatory environment each time,' said Dr Chua Yang Liang, its head of research for South-east Asia.

'In contrast with the first set of measures (last year), which were aimed at cooling the overall market, the latest measures are targeted specifically at the 'double-barrelled speculators' who form only a small part of the universe as shown by the smaller drop in sales volume.'

Last month's sales would have been much lower if not for strong demand for NV Residences. The Pasir Ris project was last month's clear top seller, moving 347 units at a median price of $859 per sq ft (psf).

Vacanza@East in Lengkong Tujuh was next with 89 units sold at a median price of $1,107 psf.

Experts noted that last month's sales in suburban areas, or what is known as the outside central region, grew by 10 per cent over August to reach 601 units.

Sales in the city fringes and core city centre fell by 50 per cent and 60 per cent respectively from August, indicating that some with deeper pockets were holding back.

There had been forecasts that the dampening moves would hit the mass market fairly hard but the segment seems to have 'held its own' and 'could buck the declining sales trend in spite of the cooling measures', said Colliers International's director for research and advisory, Ms Tay Huey Ying.

She said it could be a sign that the fall in demand from buyers with HDB addresses could have been offset by a rise in demand from new groups of buyers.

These include people priced out of the higher-tier markets by the tighter financing rules and those planning to buy HDB flats who may now choose a private home to avoid giving up their foreign property.

Experts say developers' sales may hover around 800 to 1,000 units in the fourth quarter, with transactions for the year likely exceeding 14,000.

Knight Frank's managing director of residential services, Mr Peter Ow, told The Straits Times: 'People have a lot of confidence in the market because there's plenty of liquidity, the stock market is strong, and interest rates remain low.'

Home prices are also tipped to remain stable for the rest of the year.

According to Ms Tay, any possible rise in mass market prices would have been curbed by buyer resistance and developers' need to move sales and clear their inventory.

PropNex chief executive Mohamed Ismail said developers could price their new projects lower as recent land bids have moderated.

Mr Ow added that price direction next year will largely hinge on the amount of supply coming onstream.

joyceteo@sph.com.sg