More locals braved the circuit breaker last month to buy their dream homes though most were prudent in their decision.
Some consultants believe there will be recovery in the later half of 2020 with pent-up demand for new homes.
Developers in Singapore sold 486 new private homes in May, a sharp 75.5 per cent rebound from 277 in April, as stay-at-home buyers became more confident of committing to a purchase during the circuit breaker.
The 486 transactions in May was about half of the 952 units sold in May 2019.
The Covid-19 circuit breaker was from April 7 to June 1.
A total of 615 units were launched in May compared with 640 in April, data from the Urban Redevelopment Authority (URA) showed on Monday. The last time transactions fell below the number of units launched was in September.
Surprisingly, developers launched a similar volume of units for sale in May compared to April’s 640 units despite the closure of sales galleries, said Lee Sze Teck, Huttons Asia director (research).
“The unexpected surge in demand probably was one factor in the release of more units for sale. That being said, prices in May were at a similar level to April’s,” he said.
Including executive condominiums or ECs, which are a private-public hybrid, there were 509 new homes sold in May, up 73.7 per cent from 293 units in April.
May saw a higher number of affordable homes sold with over 90 per cent in outside central region (OCR) and rest of central region (RCR). OCR sales were 256 units in May, more than 2.5 times April’s 98; and 189 in RCR against 77 in April. There were no new launches in the core central region (CCR) in May.
The number of posh homes sold in the CCR fell to 41 in May versus 102 in April.
A unit (3,305 sq ft) at Kopar at Newton, located in the CCR was the most expensive unit transacted in May, with a price tag of S$7.8 million (S$2,385 psf), said PropNex.
May’s sales appear to be largely driven by locals and investors, said Christine Sun, OrangTee & Tie head, research & consultancy.
According to URA Realis data downloaded on Monday, the proportion of non-landed new homes bought by Singaporeans rose from 84.1 per cent in April to 84.8 per cent in May, said Ms Sun.
By absolute numbers, the number of non-landed homes bought by Singaporeans rose 81.1 per cent from 222 units in April to 402 units last month.
Foreigner purchases had similarly strengthened last month as the number of non-landed new homes bought by permanent residents and non-permanent residents surged 71.4 per cent from 42 units in April to 72 units in May.
“There seem to be more investors entering the market as sales of smaller or lower-priced units soared last month. These private homes tend to be more popular among investors given their affordability and attractive investment yield,” she said.
This is consistent with news in May by CDL that they have sold more units in Q1 2020 versus a year ago, but at lower sales value.
Last month, the number of smaller units (excluding EC) below 800 square feet that were sold rose 70 per cent to 319 units in May from 188 units in April. Buyers are exercising more prudence and more attracted to lower quantum purchases.
On a similar note, the proportion of private home sales excluding EC at prices below S$1 million increased from 23.6 per cent in April to 28.7 per cent in May, which was the highest proportion recorded since August 2019 (29.6 per cent), said Ms Sun.
Said Desmond Sim, CBRE head of research, South-east Asia: “Overall, the units that were transacted in May were also of lower quantum where data has shown that median prices have fallen by 15.3 per cent from S$1.43 million from the start of 2020 to S$1.21 million in May 2020.”
“Anecdotal evidence has also pointed to some developer discounts and incentives which may have helped to give buyers the final push, particularly for those who have been waiting on the sidelines, possibly from end of last year,” he said.
Consultants are encouraged by the higher sales in May noting that it was a full month of circuit breaker amid bad news with the economy contracting sharply and more layoffs. They also see momentum continuing this month.
Total employment in the first quarter of 2020 performed worse than expected, declining by 25,600, the largest quarterly contraction on record, according to the Ministry of Manpower (MOM) on Monday.
This is higher than the 19,000 cited in the ministry’s preliminary data released on April 29. It also exceeds the 24,000 contraction seen in Q2 2003 during the peak of the severe acute respiratory syndrome, or Sars, outbreak.
MOM attributed the decline in Q1 to “significant cutbacks in foreign employment”, but added that local employment also fell slightly due to sharper-than-expected declines in the trade and tourism-related industries.
The whole month of May was expected to be largely a write-off for new home sales as a result of the circuit breaker, said Leonard Tay, Knight Frank Singapore, research head.
“But the resilience of the private residential market has illustrated that the closure of showflats cannot stop the demand for new homes and the adaptability of buyers, and it is possible for the primary residential market to function in a time of Covid-19,” he said.
“Notwithstanding the economic and business challenges in 2020, pent-up demand for new private residential units and substantial liquidity among families and individuals who are able to weather the disruptions of Covid-19 and kept their powder dry, will create an environment for the recovery and subsequent strengthening of the private residential market in the later half of 2020, should some degree of limited physical interaction be permitted,” said Mr Tay.
There are some encouraging signs in this month’s new home sales numbers, noted OrangeTee’s Ms Sun.
According to URA Realis data, 155 new homes excluding ECs have already been sold in the first seven days of June, which is more than half the 277 units inked in April, she said.
“Nonetheless, we should observe the market a while more to ascertain if the market is indeed on the road to recovery,” she said.
It is yet to be seen how upcoming launches in the remaining of the year will be priced. One such development to note is The Ryse Residences, a mixed development next to Pasir Ris MRT Station, and Irwell Bank Residences, a luxury project in District 9 by CDL.
Developers have sold just above 3,000 units (excluding EC) in the first five months of 2020.
Consultants have forecast that sales this year could reach 7,000.