May Sees a Sharp Decline in New Private Home Sales, Dropping 78.7% Yearly Amidst Market Downturn

May witnessed a significant decrease in new private home sales, marking the lowest figures for the month since records began in June 2007, with a nearly 80% drop compared to the previous year.

The lack of significant project launches last month exacerbated the typical mid-year slowdown, further dampening the already weak sales momentum of recent months.

The Urban Redevelopment Authority (URA) disclosed on Tuesday (Jun 18) that developers sold only 221 condominium units in May, a steep 78.7% decrease from the 1,039 units sold in the same month last year.

Excluding executive condominiums (ECs), the sales for May also fell by 26.6% from the 301 units sold in April.

According to Christine Sun, chief researcher and strategist at OrangeTee Group, this May's sales were not only the lowest in the past three months but also the lowest for the month since 2008, when 453 units were sold.

When including ECs, a total of 261 units were sold in May, with 248 units launched. This is in stark contrast to the 1,056 units sold and 1,595 units launched in May 2023. For comparison, April 2024 saw 352 units sold and 278 units launched.

Tricia Song, head of research for Singapore and South-east Asia at CBRE, observed that the sales figures for May 2023 were bolstered by two significant launches – The Continuum in District 15 and The Reserve Residences in District 21.

However, this May lacked notable project launches, particularly in the suburbs and city fringe areas, which are typically more affordable and accessible than prime segment homes, Sun added.

Nicholas Mak, chief research officer at Mogul.sg, noted that the primary market sales have slowed down considerably. Over the past decade, developers have averaged annual sales of 8,853 private housing units, or about 738 units per month. Yet, in the first five months of 2024, only 1,697 units have been sold, falling short of the average annual sales figure.

This downturn has prompted several analysts to revise their forecasts for the year. Initially, Knight Frank predicted primary sales volumes between 7,000 and 9,000 units for 2024, but this estimate has now been adjusted to below 7,000 units.

CBRE has reduced its forecast for new home sales to between 5,500 and 6,500 units, down from the previous range of 7,000 to 8,000 units. Song from CBRE also mentioned that the private residential prices, which saw a 1.4% increase in Q1, might experience a slower growth rate for the remainder of the year.

Mak suggested that primary market sales could fall to levels comparable to the 1998 Asian Financial Crisis when only 6,096 new units were sold.

Sales volumes are expected to remain low until either mortgage rates decrease or the government relaxes some cooling measures, according to Leonard Tay, head of research at Knight Frank Singapore.

Despite the current market conditions, CBRE's Song anticipates a 3 to 4% price growth in 2024, without expecting a significant correction due to strong household balance sheets and low unsold inventory levels. However, a rebound in developer sales is not anticipated until 2025.

In May, two smaller projects were introduced to the market – Jansen House in District 19 and Straits At Joo Chiat in District 15. Jansen House sold three units at an average price of S$2,098 per square foot (psf), while Straits at Joo Chiat sold two units at S$2,091 psf.

A single unit at Skywaters Residence was sold to a foreign buyer for S$47.3 million or S$6,100 psf, resulting in an Additional Buyer’s Stamp Duty of S$28.4 million, as pointed out by Eugene Lim, key executive officer at ERA. The Shenton Way project is still awaiting its public launch and has been offered to select clients.

Overall, 248 units were launched in May, a mere 15.5% of the 1,595 units launched in May 2023 and slightly less than the 278 units launched in April 2024.

Subdued Market Performance

According to URA data, the suburban Outside Central Region (OCR) led condo and private apartment sales in May, accounting for 63.8% of the sales.

The Rest of Central Region (RCR) or city fringe followed, contributing to around 30% of primary sales, while the prime Core Central Region (CCR) comprised 12.2% of the new sales.

The top 10 best-performing projects in May were all from existing developments, primarily in the OCR and RCR, indicating a shift towards price sensitivity among buyers due to economic challenges and high mortgage rates, as noted by CBRE's Song.

The most successful project in May was the Lentor Hills Residence in District 26, with 25 units sold at an average price of S$2,164 psf.

The Lentor area recorded the highest sales with 69 transactions, according to Lee Sze Teck, senior director of data analytics at Huttons Asia.

Analysts anticipate a slight increase in sales in the second half of the year as more significant projects are launched, including the Emerald of Katong and The Chuan Park, both offering over 800 to 900 units, as highlighted by Mohan Sandrasegeran, head of research and data analytics at SRI.

Amendment note: An earlier version of this article incorrectly stated the tenure of The Continuum.

Adapted from The Business Times, Jun 18, 2024.

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