Tuesday, September 16, 2008

Ghost Month Pulls Down Home Sales

Source : The Straits Times, Sep 16, 2008

Some link low sales figure of 320 units to the financial turmoil in US

SALES of new private homes took a big hit in August as the Hungry Ghost month - considered by some an inauspicious time for big decisions - weighed on sentiment already dragged down by global economic uncertainty.


Property developers sold only 320 units, a third of what they sold in July and the smallest number since April, according to data released by the Urban Redevelopment Authority yesterday. This sharply reversed three months of rising home sales and stemmed partly from the absence of new launches.

But some property consultants said sales beat their expectations as they had predicted an even poorer performance in the Hungry Ghost period. Last month was only the second month this year when units sold outpaced units launched, said DBS Vickers analyst Adrian Chua.

Kovan Residences

Some projects proved 'noteworthy successes' in the month, including boutique condominium Urban Lofts at Rangoon Road, which sold out all 46 units, said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.

Higher-end projects Martin No. 38, Belle Vue Residences and Reflections at Keppel Bay all sold units at above $2,000 per sq ft (psf), while luxury development Nassim Park Residences sold eight units at a median $3,349 psf - 13 per cent higher than its median price in July.

Nassim Park Residences

Consultants expect sales to pick up now as more projects come on the market. Already, buyers are understood to have bought about 60 units at Concourse Skyline in Beach Road during the soft launch over the weekend, at prices ranging from $1,500 to $1,800 psf, developer Hong Fok said.

Far East Organization is also understood to have started sales at its Silversea condo in Amber Road, with about 13 units sold since Wednesday at prices averaging $1,500 psf, sources said.

Last month, developers put up just 194 new homes for sale, a fraction of the 1,322 units they released for sale in July and the least since monthly figures were made public last year. No new units were launched in suburban areas, possibly as buyers there are more superstitious, said Dr Chua Yang Liang, head of South-east Asia research at Jones Lang LaSalle.

He expects sales and launches to recover this month and home prices to remain stable, as 'most developers are releasing in phases to avoid flooding the market'.

But other consultants believe the financial turmoil in the United States continues to take its toll on home buying sentiment here and may put more pressure on home sales and prices in coming months.

'It's convenient to blame the ghosts for the low sales in August, but I think this is more than just the Hungry Ghost effect,' said Mr Colin Tan, associate director at property consultancy Chesterton International.

'As more bad news unfolds from the US banks and other Western financial institutions, we would expect developers to turn more cautious and delay launches further, perhaps until the situation becomes clearer in the first half of next year,' added Mr Ku Swee Yong, director of business development and marketing at Savills Singapore.

He said last month's figures looked especially bad next to those in June and July because developers had tried to push units out before the Hungry Ghost month, boosting sales in those two months. Developers launched more than 1,000 units in June and July and sold more than 800 each month.

'Given that there were almost no new launches last month, selling 320 units is already quite good,' said Mr Ku. He noted that monthly sales in the last 12 months have hovered at about 320 units three times - in December, January and March - dipping below that in February and April.

But Mr Tan had a bleaker view. 'Sales cannot be zero, but at 320 homes sold I would describe the market as dead, there's no two ways about it,' he said.


'It's convenient to blame the ghosts for the low sales in August, but I think this is more than just the Hungry Ghost effect.'

Mr Colin Tan, Chesterton International associate director, who believes the financial turmoil in the US has also played a part in dipping property sales here

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