Pullback In Property Buying To Continue, Car Sales Likely To Pick Up In Coming Months

Source : TODAY, Weekend, February 16, 2008

Latest housing and retail sales data both show increased cautiousness led to a pullback in buying. But while sales of cars and other big-ticket items are likely to pick up in the coming months on the back of rising incomes, the slow take-up rates in property sales will likely continue to bleed into the next two to three months.

According to the Urban Redevelopment Authority, the number of new private homes sold in January remained unchanged from 328 in December, while developers launched 410 units, down from 492 in December.

“Investor demand has clearly dried up,” said Mr Colin Tan, head of consultancy and research, Chesterton International. “It’s related to the stock market. It’s very volatile, one day up, next day down. So, I think the tremendous amount of uncertainty with respect to the global economic outlook is obviously causing investors to stay away from buying property at this time.”

Smaller developments, especially those outside the central areas, saw demand, said Mr Tan - citing the sale of 79 units at Waterfront Waves at Bedok Reservoir Road. Most of the units sold last month were from outside the central region (170) and cost below $1,000 per square foot.

The modest start to the year is likely to prevail, said property consultants.

“The low numbers would probably continue for the next one or two months, certainly for the first quarter of this year, until the dust settles and we get a clearer picture of how the sub-prime problem has affected bank earnings,” said Mr Donald Han, managing director of property consultancy Cushman and Wakefield.

That cautious outlook also holds true for the retail sector, even as festive shopping led to a 2.5 per cent year-on-year gain in sales in December, which reverses a 0.3-per-cent decline in November, Department of Statistics data show.

But motor vehicle sales contracted for the third straight month in December, dropping 12.5 per cent year on year.

“This possibly reflects an increased cautiousness with regards the future or that potential car owners are very sensitive to certificate of entitlement costs and petrol prices,” HSBC economist Prakriti Sofat said. Oil prices breached US$100 a barrel last month, increasing fuel and transport costs for consumers.