But new launches may accelerate activity again, say market watchers.
Private home sales are expected to slow this quarter - the result of the twin effects of the US sub-prime woes which made the headlines in August and the just-ended Hungry Ghost month.
But the pace of activity is expected to pick up again as developers step up launches and confidence recovers, say property market watchers.
Fresh price benchmarks may still be set for projects offering compelling propositions, but developers are likely to tread carefully before upping prices.
CB Richard Ellis (CBRE) estimates that the total number of new private homes sold by developers in the primary market during Q3 will be 3,500-4,000 units including sales from ongoing projects. This is lower than the 5,129 units sold in Q2 and 4,783 units transacted in Q1 this year.
Activity also decelerated in the secondary market in Q3. ‘Whereas the first and second quarters saw resale volumes of 4,645 units and 6,514 units respectively, it is likely that Q3 figures will be lower, probably in the region of 4,000 to 4,500 units,’ CBRE executive director Li Hiaw Ho says.
‘Anecdotal evidence suggests that subsale activities have been muted as investors become more cautious,’ Mr Li added. Subsales as a percentage of total private housing sales are likely to fall below the 7.4 per cent and 9.7 per cent in Q1 and Q2, he predicts.
Subsales, often used as a gauge of speculative activity, involve projects that have yet to receive a Certificate of Statutory Completion, while resales, which are also secondary-market transactions, cover completed developments.
But the current slowdown in activity is not such a bad thing, says DTZ Debenham Tie Leung executive director Ong Choon Fah.
‘The market has been going up quite dramatically. It’s good that people step back and evaluate their positions before moving on. This window also creates an opportunity for people to enter the market. When the market is so hot, everytime you put in an offer at the seller’s asking price, he raises his price,’ she says.
Ong Chong Hua, executive director of Ho Bee Investment, also describes the current slowdown as ‘a healthy consolidation after a robust period of growth in sales volumes as well as prices’.
‘Activity will start picking up slowly and I think confidence will come back, as developers start launching more projects. Buyers will be cautious but underlying demand is still strong. The share market seems to have consolidated and strong economic fundamentals are still in place for Singapore and the Asian region,’ he said.
Among the projects expected to be released soon are MCL Land’s Hillcrest Villas cluster terrace homes along Dunearn Road, Ho Bee’s Turquoise condo at Sentosa Cove, Bukit Sembawang’s Paterson Suites and SC Global’s Hilltops in so said to have Cairnhill. CapitaLand is albegun selling Latitude at Jalan Mutiara at around $2,800 per square foot on average.
Projects that are slated for launch in Q4 include Lippo’s condo on Sentosa Cove, Ritz-Carlton Residences at Cairnhill, and the second phase of Marina Bay Financial Centre.
Says DTZ’s Mrs Ong: ‘Sales activity may be slow for the next couple of months, but this will depend on the type of projects launched and their price points. If developers release projects that are targeted at home owners, demand is still very much there. But if they’re targeting investors or want to set benchmark prices, buyers will take a longer time to consider.’
Ho Bee’s Mr Ong said: ‘Developers will definitely be more cautious in moving up prices and trying to set benchmarks all the time. They will test the waters.
‘But I don’t think anybody will cut prices because fundamentals are still strong. There’s still a shortage of homes, with a lot of those who sold their homes in en bloc sales looking for replacement properties.’
CBRE’s executive director (residential) Joseph Tan reckons that the market could still see benchmark prices if the right kind of products are offered, such as branded residences.
Looking to the final quarter of 2007, the residential market will remain active as the government’s projected economic growth rate of 7 to 8 per cent for 2007 remains on track. ‘If developers sell around 3,000 to 4,000 units in Q4, then the total number of new homes sold in 2007 will be a new record of 17,000 to 18,000 units,’ CBRE’s Mr Li said.
This will be significantly higher than the 11,147 units sold in the primary market last year.
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