July 16, 2018

Ms. Tricia Song, Head of Research for Singapore, Colliers International:

“The sale of new private homes tumbled by 41.7% in June to 654 units (excluding Executive Condos) from 1,122 units in May. It is the lowest monthly transaction figure since the 384 units sold in February 2018. June’s sales were also 20.2% lower than the 820 units shifted in the corresponding period last year.

This brings 1H18 developer sales to 4,090 units (excl. ECs), about 32.3% lower compared to 6,039 units sold over the corresponding period in 2017.

We believe the decline in sales last month was due mainly to prospective buyers taking a more circumspect approach to home hunting, possibly eschewing pricier units. With more project launches lined up over the rest of the year, prospective buyers are also spoilt for choice. The sold-to-launch takeup rate in June 2018 was 0.90x, compared to 1.06x in May, 1.10x in April 2018 and 5.2x in June 2017. 

This was in line with our broad observation that the property market is finding its own equilibrium – as market dynamics play out - a year into the recovery which started in the second half of 2017.

Following the fresh cooling measures implemented on July 06, we now expect sales momentum to become more sluggish as the higher additional buyer’s stamp duty may discourage some investors from entering the market. Meanwhile, the lowered loan-to-value ratio to 75% will likely impact marginal first-timer buyers’ ability to purchase homes. They may defer the purchase decision as more time is needed to raise the additional capital outlay required to make the down payment for the purchase. 

New launches accounted for a lion’s share of the sales last month. The best-selling private residential projects in June were: Margaret Ville which sold 121 units at a median price of SGD1,873 psf; Affinity at Serangoon which shifted 107 units at a median price of SGD1,584 psf; The Garden Residences which transacted 64 units at a median price of SGD1,662 psf; and previously launched Twin Vew which recorded 64 transactions at a median price of SGD1,350 psf. 

The two neighboring and competing projects – Affinity at Serangoon and The Garden Residence saw relatively weaker takeup rates, at 10% of their respective total available units, possibly due to their benchmark pricing of over SGD1,500 psf in the Serangoon North enclave.  

In the EC segment, inventory continued to dwindle. Developers sold 52 new EC units in June – down from 137 in May – with Rivercove Residences in Anchorvale Lane accounting for more than half of the sales at 29 units which were transacted at a median price of SGD1,000 psf, a record high for new ECs. Just two months into its launch in April, the 628-unit project is now almost fully sold, with only one unit still available as at end-June 2018.  

Colliers International believes the fresh property cooling measures announced on July 05 will put a drag on home sales for the rest of the year as the higher ABSD could curtail investment demand from both locals and foreigners, and the larger cash outlay required for down payment on homes weighs on buying interest.

Sales in July will likely jump from the June numbers, bolstered by the flurry of last minute deals done – estimated at 1,000 units from three project launches – The Stirling Residences, Park Colonial and Riverfront Residences - on the evening of July 05 to beat the ABSD deadline. 

We expect new home sales to decline significantly in the next few months as the market takes stock of the potential implications. Developers and buyers are also likely to shun the month of August due to the Ghost Month which starts on 11 August.

For the whole of 2018, Colliers projects that new private home sales (excluding ECs) could come in at 8,500-9,000 units – 15-20% lower than the 10,566 units shifted in 2017. Meanwhile, Colliers expect home prices to likely hold steady from this point, after rising by 7.4% in the first six months of this year. For already launched projects, they are unlikely to show a downward trend in actual transacted prices. For those yet to be launched, developers are likely to trim their average selling prices from their original intended aggressive pricing to current achieved levels, instead of a continuously increasing trajectory.”