Flood Of New Homes But Sept Sales Up Just 18%

Source : The Business Times, October 16, 2008

Developers quadrupled the number of new homes for sale last month, but units sold rose only 18 per cent from August.

Accompanying the less-than-satisfactory take-up were lower prices in some areas, according to Urban Redevelopment Authority data released yesterday.

The number of units sold recovered slightly to 376 last month from 320 in August, which coincided with the traditionally slow Hungry Ghost month.

A total of 767 new units were put up for sale - including 258 in the core central region (CCR) where sentiment is weakest.

Given the big jump from 194 in August, some analysts say that this could be due to smaller developers with less holding power launching units even during a weak market.

'They could be pushing out projects in the CCR, even though sentiment is bad in the high-end segment, because they have no choice,' one analyst said.

Take-up was especially poor in the CCR. The region accounted for 34 per cent of units launched last month but only 19 per cent of sales.

On the other hand, September's jump in launch volume could be because some projects were withheld during the Hungry Ghost month, said Nicholas Mak, director of research and consultancy at Knight Frank.

Last month also saw prices ease slightly in areas such as Bukit Timah and Newton. CBRE said that some units at Madison Residences and Floridian along Bukit Timah Road were sold at median prices of $1,801 per square foot (psf) and $1,443 psf - 10 per cent lower than a year ago.

Similarly, Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5 per cent less than comparable projects early this year, CBRE noted.

Preliminary URA estimates show that the Q3 residential price index fell 1.8 per cent, after climbing 3.9 per cent in the first half.

But many developers are holding prices firm. 'There is still no broad-based decline in home prices based on the September sales, although news about Lehman Brothers and AIG has dampened sentiment,' said Li Hiaw Ho, executive director at CBRE Research.

Sales volume last month was driven mostly by new launches such as Concourse Skyline (68 units sold), The Peak At Balmeg (47), Traselveo (41), Viva (19) and Mulberry Tree (13). Most of the units launched and sold were in the rest of central region (RCR).

Analysts said that buyers are looking at mid-range private properties - even more than at mass-market homes. The RCR, where most mid-tier private homes are located, accounted for 48 per cent of launches and 60 per cent of sales last month.

Colliers director for research and advisory Tay Huey Ying said that sales volume is likely to dip to 250-300 this month. 'The mood in October will likely be sombre due to the shockwaves from recent events in the global financial industry,' she said. 'Hence, developers's launch volume is likely to come in lower than September's but still higher than August's.'

Developers will not cut asking prices drastically in the next few months, analysts reckon. But small falls can be expected. Colliers, for example, expects prices of high-end and luxury homes to continue to slide by up to 5 per cent in Q4, while prices of mid-tier homes could fall up to 3 per cent.

Ms Tay said that prices of mass-market homes can be expected to hold firm or weaken less than 2 per cent in Q4.