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Business Times - 16 Jun 2011

Buyers vote to wait, new home sales slow after GE

May sees 13% drop in sales, June may be even weaker as buyers study new minister's policies


(SINGAPORE) Sales of new private homes (excluding executive condos) fell 13 per cent month-on-month in May as buying interest cooled in the face of policy risk.

Developers sold 1,575 new private homes in May, down from 1,805 units in April.

Including executive condominiums (ECs), 1,825 new homes were sold by developers in May, a 5 per cent dip from the 1,918 new private homes and ECs sold in April.

Analysts attributed the drop to last month's general election (GE), which could have prompted buyers to assume a 'wait-and- see' approach in anticipation of new cooling policies.

'Apart from the market taking a breather in the lead-up to the GE in the first weekend of May, some developers and buyers could have adopted a wait- and-see approach, pending clearer directions on impending housing policy changes and measures post-GE,' said Chia Siew Chuin, Colliers International's director of research & advisory.

'Some buyers could also have become more price- sensitive and selective,' she added.

Sales in June are expected to be even weaker than in May as developers and property agents have reported slower home sales since last week, after National Development Minister Khaw Boon Wan cautioned against market exuberance in his blog.

'June sales will drop because we have a new minister who has sounded a strong warning,' said International Property Advisor chief executive Ku Swee Yong.

'He (Mr Khaw) also said that he will ramp up the supply of new HDB flats this year and next year. This could affect sales of mass-market homes as some buyers might decide to wait for greater clarity on where the new HDB flat supply will be before they decide what to buy.'

Echoed Li Hiaw Ho, executive director of CB Richard Ellis (CBRE): 'With the government's plan to release land for another 8,115 new private homes in the second half of 2011 via its confirmed land sales schedule, and to release 25,000 (new) HDB flats for sale for the whole year, there is some degree of apprehension as to how it will impact the mass-market segment.'

In May, sales in the outside central region (OCR), where suburban mass market condos are located, accounted for 60 per cent of all new private homes sold over the month. Developers sold 945 units in the OCR last month.

All three private housing projects with the most number of units sold in May were located in the OCR. Terrasse in Hougang sold 184 units at a median price of $994 per square foot (psf), Foresque Residences in Bukit Panjang sold 141 units at a median price of $1,108 psf, and Eight Courtyards in Yishun sold 137 units at a median price of $806 psf.

Over in the mid-tier rest of central region (RCR), developers sold 458 private homes in May, making up 29 per cent of all private homes sold during the month.

Sales of high-end and luxury homes in the prime core central region (CCR) continued to be subdued. Just 172 units (11 per cent of all private homes sold) were bought in the CCR.

But a new record was set for private home prices with the sale of a unit in The Marq on Paterson Hill for $5,842 psf, surpassing the previous high of $5,600 psf set in October 2007 at The Orchard Residences. Two other upmarket projects in the CCR - The Peak @ Cairnhill and Tomlinson Heights - sold four units each at median prices of $2,637 psf and $3,129 psf respectively.

Analysts also noted that in line with the more muted market sentiment, developers cut down on the number of new homes they launched in May. They rolled out just 1,215 new private homes - a sharp 41 per cent drop from the 2,055 new private homes launched in April.

The lower launch figure for May was also due to many small projects being put on the market.

But analysts said that while home sales fell month-on-month in May, there is still not much evidence that the last round of demand-side cooling measures - introduced in January - have had a significant impact on the private residential market as sales are still about 45 per cent higher than in May 2010.

CBRE also noted that the number of new homes sold in the second quarter of 2011 will still be higher than in Q1.

The firm predicts that more than 4,000 new private homes (excluding ECs) will be sold over the whole of Q2 - higher than the 3,595 new homes sold in Q1. But it added that the take-up of new homes in Q3 is likely to be lower than in Q2.