Home Sales Hit A Wall As Stock Jitters Spook Buyers

Source : The Business Times, October 16, 2007

Fewer launches add to September slowdown but analysts expect pick-up amid new benchmark prices














Developer sales of new homes slowed to a crawl in September, hit by stock market jitters caused by sub-prime woes in the US.

Just some 529 new units were sold by developers last month, a sharp drop from the 1,731 units sold in August.

Property analysts said that September's take-up rate for new homes could be the lowest monthly figure seen over the past four years.

The low sales were also caused, in part, by fewer launches.

Developers launched just 570 units in September, down from 1,885 units in August as many held back projects while waiting for the market to recover.

However, despite the low volume, new benchmark prices for private homes were set in several areas across Singapore - including Sentosa Cove, Boon Lay and science hub one-north - market observers pointed out. This means that genuine demand for homes still exists, they said.

The Urban Redevelopment Authority (URA) released its monthly update on private residential properties yesterday, showing that developer sales of new projects fell sharply last month.

'The primary sales market was relatively quiet in the month of September,' said Tay Huey Ying, Colliers International's director for research and consultancy.

Like other analysts, Ms Tay attributed the low volumes to the global financial market turmoil as well as the traditionally quiet lunar seventh month.

Developers were also holding back projects, both due to market sentiment and because preparations for their launches could not be finished in time, others said.

'A few developers' projects have been held back because of contractors being delayed when it comes to getting the showflats ready,' said Savills Singapore director of marketing and business development Ku Swee Yong.

The largest project launched during the month was the 163-unit Hillcrest Villa, a cluster housing project.

The poor market sentiment also affected sales at Frasers Centrepoint's Soleil @ Sinaran as more than 10 per cent of buyers did not exercise their options to purchase their chosen units.

URA's figures for August showed that 394 out of a total of 417 units launched in the development had been sold, but the number sold fell to 352 in September's data. Frasers Centrepoint confirmed that 42 options were not exercised before their deadlines, but added that 12 of the units involved have since been resold. The total number of units sold in the project climbed to 395 as the market picked up in October, the developer said.

Analysts also noted that two other trends seen in July and August - the decline of speculative activity and the increased demand for mass market homes - continued into September.

'Subsales of residential properties accounted for only a small 6.8 per cent of all transactions in the month of September compared to 9.4 per cent in August and 15.1 per cent in July,' said Ms Tay. Subsale transactions are generally thought to be an indication of the level of speculative activity in the property market.

And in line with a recovering mass market, new units priced in the range of $751-$1,000 per square foot (psf) remained the most sought-after in the third quarter, accounting for 36 per cent of all units sold, Colliers analysis shows.

This was followed by units in the next price range of $1,001-$1,500 psf, which made up 26 per cent of all units sold. By contrast, luxury homes priced above $3,000 psf accounted for only 8 per cent of all new units sold in the quarter.

Analysts expect the property market to recover in the last quarter due to genuine buyer demand.

'Going forward, we expect the sales momentum in the residential market to continue at a healthy pace against a backdrop of a strong economy,' said Li Hiaw Ho, executive director at CBRE Research.