Up 77%: New Private Home Sales

Source : The Straits Times, July 16, 2008

Best showing since last Sept following US sub-prime woes, but market still cautious

SALES of new private homes shot up 77 per cent to 801 units last month, from just 453 in May, on the back of more project launches.

That was the best showing since September last year when the property market slowed in the wake of the United States' sub-prime woes and stock market jitters.

CLOVER BY THE PARK: The 616-unit Bishan development saw 197 units sold. -- PHOTO: SIM LIAN

But these numbers do not necessarily signal the return of the good times. The mood in the property market remains cautious, particularly as more bad news emerges from the US, market watchers say.

Last month, the total number of units launched by developers - mostly in the mass to mid-end segment - registered a dramatic jump of 124 per cent to 1,069 units, according to monthly figures released by the Urban Redevelopment Authority (URA) yesterday.

Developers are stepping up launches despite the weak sentiment as they want to launch ahead of the Hungry Ghost month starting on Aug 1, said Colliers International director for research and advisory Tay Huey Ying. Some home-hunters believe it is unlucky to buy at this time.

Some developers hope to clear stocks of 99-year leasehold properties which will become less attractive as the leases run down, she said.













Last month's healthy sales figures were propped up, to a large extent, by the volume done at two large 99-year leasehold projects.

The 616-unit Clover by the Park in Bishan, alone accounted for 197 units sold - out of 308 units launched for sale - at a median price of $765 per sq ft (psf). The 348-unit Dakota Residences in Dakota Crescent sold 144 of 210 launched units at $978 psf.

Most of the properties sold last month were under $1,000 psf, indicating demand from upgraders, said the director of Savills Residential, Mr Ku Swee Yong. Only projects which were priced realistically sold fairly well, he said.

June sales show there is latent demand but buyers are price-sensitive, said DTZ executive director and regional head for consulting and research Ong Choon Fah.

Knight Frank director of research and consultancy Nicholas Mak said the number of launches has risen faster than sales figures, which could result in a gradual rise in the number of unsold housing stock.

If this stock builds up, it will be one of the factors that could weigh on prices.

But for now, this month's sales figures are expected to be even stronger owing to more new launches, consultants said.

However, there should be a drop in next month's home sales due to the Hungry Ghost month coupled with continuing fallout from the US housing crisis, said Mr Mak.

Price weakness, if any, will register only in the third or fourth quarter, he said.

The turnout at new showflats remains strong but potential buyers are very cautious when it comes to committing to a purchase, market watchers say.

'There's no push factor to buy now,' said Mrs Ong. 'Sentiment has been affected over the weekend by the US news. But affordability is still there.'

As developers are increasingly forgoing aggressive pricing strategies in favour of competitive pricing, cumulatively, the general market will see softer prices, said Ms Tay.

Colliers International's research shows that luxury apartment prices already fell 3.9 per cent from the first quarter to an average of $3,049 psf in the second quarter, she said.

Meanwhile, the URA yesterday put up for sale a condominium site that is just next to the Tanah Merah MRT station.

Consultants expect a new 99-year leasehold project on the site to fetch average prices of between $700 psf and $800 psf.