Home buying momentum remains despite slower sales

Sales of new private homes in Singapore fell 16 percent to 322 units in January this year from the 384 units sold in December 2015, according to latest data from the Urban Redevelopment Authority (URA).

Including executive condominiums (ECs), developers sold 478 units in January, down from 508 units previously.

Year-on-year, developer sales (excluding ECs) dropped 14 percent from the 376 units sold in January 2015.

Despite the drop in sales, analysts believe that there continues to be traction in the market.

“There is still a momentum that’s underpinned by genuine buyers looking to buy a home for owner-occupation. Buyers are steadily picking up previously launched projects – both private homes and ECs,” said CBRE’s Desmond Sim, Head of Research Singapore & Southeast Asia.

“Despite the fact that there have been no new EC launches for the past three months, the market registered EC sales of an average of 155 units. Developers have been drip feeding the private home market with units of previously launched projects.”

The top-selling private residential projects in January were The Poiz Residences, Kingsford Hillview Peak, Sims Urban Oasis, Botanique at Bartley and The Panorama, revealed JLL, which attributed their better sales performance to their proximity to MRT stations and amenities.

For ECs, the better performing projects were The Amore, CDL’s The Brownstone, and The Vales.

Looking ahead, Ong Teck Hui, National Director, Research & Consultancy at JLL, reckons that the biggest immediate threat to stability in the residential property sector is the volatility in the stock market.

“As the volatility continues, a soft landing for the private home market in 2016 appears less likely. Buyers would become more cautious and developers would be less confident in launching new projects.”

He noted that the correlation between the stock market and the residential market can be significant, as seen during the last global financial crisis (GFC) when the stock market plunged 62 percent between October 2007 and March 2009, and developer sales dropped 71 percent to 4,264 units in 2008 from 14,811 units in 2007.

“While current financial market conditions are considered less severe than the GFC, continued volatility in the stock market is still likely to have an adverse impact on the residential market,” added Ong.

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