After the year-end holiday season, developers posted their best January private home sales figure in seven years.
Given the ongoing Covid-19 outbreak and the hit it will have on the economy, many developers are fearful of the impact on the volume of new private home sales – and on their pricing power.
Property consultants expect some short-term impact on sales volume, but most seem sanguine that underlying demand for new private homes will remain healthy.
In fact, quite a few, including JLL’s senior director of research and consultancy, Ong Teck Hui, are predicting the possibility of a resurgence in buying activity from pent-up demand when the threat of Covid-19 abates.
“While there could be some moderation to the volume of transactions in the short term, an immediate negative impact on prices is not expected, as sellers are generally not under pressure and able to hold,” he added.
Data released by the Urban Redevelopment Authority on Monday shows that developers moved 618 private homes in January this year, up 14.9 per cent from the 538 units they sold in the month before. The latest figure is also 41.4 per cent higher than the 437 units developers sold in January 2019. These figures exclude executive condominium (EC) units.
Including ECs, which are a public-private housing hybrid, developers found buyers for 638 units last month, up 15.8 per cent from the 551 units they sold in December last year and 45.7 per cent more than the 438 units developers sold in January last year.
Three new projects were launched last month, all of them in the prime districts: Leedon Green, The Avenir in River Valley Close and Van Holland.
So far this month, sales have begun at some new projects; these include the Parc Canberra EC in Sembawang, the final phase of the Luxus Hills landed housing development, and Verticus in the Balestier area.
Savills Singapore executive director Alan Cheong commented: “At this juncture, with healthy sales registered at Parc Canberra and the good turnout at The M preview, the impact of the coronavirus has perhaps only marginally affected buying sentiment.
“For now, the impact… has probably affected developers’ sentiment more than buyers’.”
Developers may delay launches till there is better clarity on the outcome from this outbreak. “This will affect total sales during this period because the less developers launch, the lower the new sales volume. If that is the case, then resale transactions may dominate total private home deals in Q1 2020, leading possibly to a softening in the overall URA private home price index for the quarter.”
To put things in perspective, Colliers International’s head of research for Singapore, Tricia Song, said the Covid-19 outbreak could dent demand for residential properties in several ways. These include weaker overall market sentiment, and social distancing as people shun crowded places, including showflats. Moreover, foreign buyers are likely to postpone purchases of Singapore residential properties, especially in the high-end segment; this is particularly so for Chinese buyers given travel curbs. “These concerns are valid; depending on how severe and protracted the situation becomes, some of the planned new launches could be pushed to 2021,” she added.
In a similar vein, Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, said: “With the latest GDP figures revised downward, the Singapore economy is expected to take a hit from the disruption of businesses due to the Covid-19 outbreak. With some business sectors expected to experience a slowdown, buyer sentiment is expected to be more cautious until the situation improves, which could potentially be in the first half of 2020.
“Nonetheless, the underlying demand in the private residential market should remain unchanged and with pent-up demand accumulating, the market could potentially see a surge of transactions in the second half of 2020, after the outbreak.”
Citing lessons from the 2003 Sars outbreak, Ms Song of Colliers said that – barring a protracted downturn from the coronavirus outbreak – “we think pent-up demand will return later and developers will refrain from major price cuts”.
ERA Realty’s head of research and consultancy Nicholas Mak said developers are expected to launch more housing units (including ECs) this month than last month.
Over the weekend, Hoi Hup Realty and Sunway Developments sold 316 units at their 496-unit EC project, Parc Canberra, at an average price of S$1,085 psf.
Also over the weekend, Soilbuild Group moved five units at the freehold Verticus in Balestier at an average price of just under S$2,100 psf during a “VVIP private event”.
The company’s director Lim Han Qin said: “This is in line with our projected selling price for the 162-unit development, and close to our breakeven cost of almost S$2,000 psf.”
Bukit Sembawang last week sold 40 per cent, or 16 of the 39 landed homes in the 999-year leasehold Luxus Hills (Contemporary Collection) in the Seletar Hills area, said its general manager of marketing, Jenny Ho.
Later this month, Macly is poised to begin sales at Tedge in the Telok Kurau Road/Changi Road area. The five-storey freehold project has 42 residential units; the average price is likely to be around S$1,600 psf.
Sales at OLA, an EC project in Sengkang, are slated to begin next month.
Meanwhile, eyes are on when Wing Tai will begin sales at The M, its 522-unit condo in Middle Road.
Check out the updated Sengkang Grand Residences Balance Unit Chart for the latest updated available units and units sold.
Source: Business Times