Record Launches, Record Sales In Q2

Source : Property Report, 3 Sept, 2007

Marking the second straight quarter that the number of private residential launches in Singapore has hit a record high, a total of 4,400 units were launched in the second quarter of the year, up from a then-record 4,259 in the first. Among the major projects contributing to the big total were Casa Merah (556 units), Reflections at Keppel Bay (493 units) and Botannia (350 units).

New launches in the prime districts dominated the property scene in the previous three quarters, but this time the highest number of launches were in the ‘suburbs’, with about 2,100 units launched in Outside Central Region (OCR). About 1,400 units were launched in the Rest of Central Region (RCR), which includes ‘city-fringe’ areas such as Marine Parade, Queenstown and Toa Payoh.

Only 900 units (20.5%) were actually in the prime Core Central Region (CCR), which covers districts 9, 10, 11, Downtown Core and Sentosa. According to a Knight Frank report, the drop in the number of new launches in the CCR may be due to developers holding back the release of their high-end launches in the hope of achieving higher selling prices in the near future.

Going hand in hand with the record number of launches, residential sales also hit a record high in the second quarter, with about 5,100 private residential units sold in the primary market, a figure 6.6% higher than the 4,783 units sold in the first quarter, which was itself a record. New projects that recorded strong take-up in the primary market included Casa Merah, Montebleu, Northwood and The Riverine by the Park.

Demand is starting to spread from the high-end market to the mid-tier and mass markets, and out of the 4,800 uncompleted units sold, there were 2,100 units sold in OCR, 1,500 in RCR and only 1,200 in CCR.

Overall prices rose 8.3% compared to the first quarter, the highest QoQ growth since 2Q 1999, while prices were up 21% on the same period last year, the biggest YoY rise since 1Q 2000. Although prices were 5.3% higher than the last market peak in 2Q 2000, they were still about 18.5% lower than the record in 2Q 1996.

The rise in prices was also more evenly spread across the markets, with the non-core regions starting to rise like the prime areas. For the first time since 3Q 2005, price growth was led by RCR, with an 8.1% QoQ rise. This trend can be attributed to a growing number of homebuyers purchasing replacement properties in the city-fringe areas after selling their existing properties in en-bloc deals, as well as new local and foreign homebuyers priced out of prime locations.

Significantly, prices of non-landed residences outside the central region showed their strongest performance since the market bottomed out in 1Q 2004, growing by 7.2% QoQ, compared to the 2.0% recorded in 1Q 2007, and showing that mass-market prices are finally starting to follow the growth seen in the prime districts. The price growth was 7.9% in CCR, where projects on and around Orchard Road were reportedly sold at record prices.

The more even price growth for properties across all areas is positive for the residential market, as it not only confirms the mass-market sector’s recovery but also implies that there’s now greater uniformity in wealth creation across all tiers, revealed a Colliers report.

On the flip side, rental rises are affecting many residents in Singapore, with overall rentals growing by 10.4% in a quarter and 31.2% in a year, the highest QoQ and YoY growth since URA made rental data available to the public. It’s also the first time that residential rentals showed double-digit growth in one quarter. Still, rentals are 21.4% lower than the all-time high in 1Q 1996.

Although the rental growth of 12% in the CCR led the overall rise, the demand for rental housing continued to filter down to the rest of the market. Based on Knight Frank’s research, properties in the East Coast, Thomson and Bishan areas grew by a 10-12%.

Due to the collective sales of the last two years, some believe the reduction in existing housing stock is projected to exceed the number of new completions in the next six to 12 months. As such, strong rental demand is expected to cause average rentals to grow by 30-40% year-on-year, especially in Districts 9, 10, 11, 15 and 16.

However, the government has announced that there’s sufficient supply of housing units in the market to meet demand. In all, about 43,000 new private residential units are to be completed from 2H 2007 to 2010, of which the bulk will be completed in 2009 and 2010. Overall, private residential property prices, Colliers concludes, are still expected to grow by 23-30% for the whole of 2007