17/10/2013
Uneven showing in Sept launches as developers jostle for buyers -
Developers' private home sales surged 65 per cent to 1,246 units in September from 756 units in August
[SINGAPORE] Developers' private home sales surged 65 per cent to 1,246 units in September from 756 units in August - though the figure was slightly less than half the 2,621 units transacted in the primary market in September last year. The figures exclude executive condominium (EC) units.
Based on preliminary figures, developers have sold 2,484 private homes in the third quarter - the weakest showing since Q4 2009, when 1,860 units were sold. This shows the total debt servicing ratio (TDSR) framework introduced in late June has bitten the private housing sector deeper than previous cooling measures.
DTZ's South-east Asia chief operating officer Ong Choon Fah said the ranks of property investors have thinned significantly and those still around are going mostly for smaller units.
A closer look at the latest figures from the Urban Redevelopment Authority (URA) also revealed an uneven performance among the seven new projects (excluding EC developments) that were launched last month.
While Sky Vue near Bishan MRT Station and Thomson Three on Bright Hill Drive enjoyed strong take-up (units sold to units launched in the month) of above 80 per cent, the other five only managed take- up rates ranging from 9-45 per cent, said Jones Lang LaSalle (JLL) national director Ong Teck Hui.
The five were: Alana in Sunrise Terrace; Belgravia Villas on Ang Mo Kio Avenue 5 (both strata landed projects); The Glades condo next to Tanah Merah MRT Station; The Skywoods on Dairy Farm Road; and Onze@Tanjong Pagar.
JLL's Mr Ong said the uneven performance shows that only the more competitive projects in terms of pricing, product-mix, location and other attributes are able to generate sufficient interest in a more challenging market following the TDSR rollout.
With many constrained by the new rules, the pool of potential buyers has shrunk, so developers have to jostle harder for buyers.
"An examination of new projects launched in July and August reveals that most made little sales progress in the past two months, reflecting absence of the widespread demand that the market used to enjoy," Mr Ong added.
On a more optimistic note, CBRE executive director (residential) Joseph Tan highlighted that the 1,246 units developers sold last month were more than the combined sales in August and July, when developers' launches as well as sales retreated in knee-jerk fashion after the introduction of TDSR.
"Buyers seem to be showing some signs of coming to terms with TDSR," Mr Tan said.
Developers sold 482 units in July and 756 in August.
September's top-selling project was CapitaLand's Sky Vue condo, with 433 units sold at a median price of $1,401 per square foot.
UOL Group and Singapore Land last month found buyers for 264 units at Thomson Three at a median price of $1,362 psf. Keppel Land moved 89 units at The Glades at $1,518 psf median price.
ECs (a public-private housing hybrid) continued to do well, with 412 units sold in the primary (that is, developer sales) market last month - or 83 per cent of the 495 units launched in the same period. The best seller was Hao Yuan Development's Sea Horizon in Pasir Ris, with 317 units transacted at a median price of $818 psf.
In August, developers moved 726 EC units; the figure for July was 112.
Inclusive of ECs, developers sold 1,658 homes last month, up from 1,482 units in August and 594 units in July.
Eugene Lim, key executive officer at ERA Realty, notes that "ECs are aimed at the first-timer and upgrader market". They will continue to see good demand as buyers are not affected by loan quantum limits as long as they can fit within the TDSR framework. Buyers also do not need to pay additional buyer's stamp duty (ABSD) if they qualify for remission."
Moreover, when an HDB upgrader buys an EC unit directly from a developer, his existing HDB monthly mortgage payments are not factored into TDSR calculations as current rules require such buyers to sell their HDB flat within six months of the EC project's completion.
Based on preliminary figures, developers sold 12,434 private homes (excluding ECs) in the first nine months. Property consultants expect the year to end at 14,000-16,000 units. Last year, developers sold a record 22,197 private homes in addition to 4,499 EC units.
"Upcoming projects with an ideal location and which are priced sensitively at the right quantum should draw good demand," said PropNex Realty CEO Mohamed Ismail.
Analysts note that the $1,401 psf median price for Sky Vue last month reflected in yesterday's data is 11.5 per cent lower than the $1,583 psf median price for the next-door Sky Habitat in its maiden month of launch in April 2012.
Developers have generally been launching new projects at the lower end of their earlier expectations and are including a higher ratio of smaller units to keep the lump sum affordable. An industry player observed that with the exception of a few projects, developers and contractors seem to be "compromising on quality" to keep a lid on costs and allow for more attractive pricing.
A developer told BT that prices of its projects on the market are now 3-8 per cent below the 2011/2012 peak. "We have less pricing power for big developments with a high proportion of unsold units, and more pricing power in small projects with just a few unsold units." In the Core Central Region, the price drop could be more - around 8-10 per cent, he added.
DTZ's Mrs Ong said that transaction volumes are extremely low for completed private homes in the resale market, due to a price gap. "Those who need to sell will have to lower prices. So by the end of this quarter, we may see some price easing in the resale market."
The Straits Times - October 17, 2013
By: Kalpana Rashiwala
