Private home sales for new homes fell in May, falling to the lowest level seen for the month of May since the beginning of record-keeping in June 2007. They were also down nearly 80 per cent year-on-year.
There were no major projects marketed last month, when the slowdown in mid-year sales was further exacerbated by sales slowing in the past few months.
Data published by the Urban Redevelopment Authority (URA) on Tuesday (Jun 18) showed that developers sold 221 condo units in May, down 78.7 percent year over last year, compared to 1,039 units that were sold one year ago.
The figures for May’s sales that exclude executive condominiums (ECs), are also less than the 26,6 percent of 301 units sold in April.
May sales were the lowest in the last three months, and also since 2008 when 453 units sold.
In addition to ECs including ECs, 261 units were sold in May with 248 units launched, versus the 1,595 units sold and 1,056 units launched the same month of 2023. For comparison, 352 units were launched, and 278 units were launched in April 2024.
The 2023 sales figures for May was increased through two major launches – 99-year leasehold The Continuum in District 15 with 816 units, and 99-year leasehold The Reserve Residence in District 21 which has 732 units.
But in May this year there were no major announcements of projects in the suburbs and on the city fringe. These areas are generally cheaper and more accessible than houses in the prime area.
Amid the holiday season’s lull sales at the primary market have been slowed significantly.
Developers have sold an average of 8,853 units of private housing annually over the last 10 years. This works out to an average monthly sales of 738 units. Developers have sold only 1,697 housing units over the first five months of 2024. This is far below the number of units needed for the annual average of 8,853 housing units.
The recent slump in sales has prompted a number of analysts to cut estimates for the year. Knight Frank had estimated that primary sales volumes would be between 7,000 and 9,000 units in 2024. The forecast has been lowered to less than 7,000 units.
CBRE sliced its home sales forecast by 5,500-6,000 units, from 7,000 to 8,500 units. The same is true for residential prices in private, which are up 1.4 percent quarter on quarter in Q1 could rise at a slower pace throughout the year.
Mak estimated that primary market sales would fall to levels similar to those that were seen in 1998 during the Asian Financial Crisis. In 1998, only 6,096 units were sold.
The amount is likely to remain in check until mortgage rates drop or the government eases some cooling measures.
Prices will still grow by 3-4 percent by 2024. With balance sheets for households being able to withstand the pressure and inventory levels low it is not necessary to expect any major corrections. A rebound in sales of developers is expected to take place only by 2025.
Two small projects such as the freehold Straits At Joo Chiat and the 999-year leasehold Jansen home in District 15, both featuring 21 units were listed in May. Jansen House sold three units at a median price of S$2,098 per square foot. Straits At Joo Chiat sold two units for a median psf of S$2,091.
One unit was sold at the 99-year leasehold Skywaters Residence in the month of March to a buyer from outside the country, for S$47.3 million or S$6,100 psf. The buyer was required to pay S$28.4million in additional stamp duty. Shenton Way has not yet been publicly launched and was only advertised to a select group of customers.
Altogether 248 units were released to the market last month that’s only 15.5 percent of the 1,595 units released in the month of May 2023. It’s also a bit lower than the 278 units released in April 2024.
URA data revealed that the suburb Outside Central Region (OCR) which is the third market segment was still the top choice for condominium and private apartment purchases, with 63.8% percent of all sales May.
Then came the Rest of Central Region (RCR) or city fringe, which accounted for around 30% of the initial sales, as well as the main Core Central Region (CCR) that accounted for 12.2 percent of the new sales in the month of March.
The 10 top projects that performed best in May were all existing projects that are located within the OCR or RCR. This indicates that buyers are becoming more price-sensitive due to the economic downturn and high mortgage interest rates.
The most popular project in District 26 was the Lentor Hills residence, a 99-year leasehold development. 25 units were sold at a median cost of S$2,164 for each square foot.
Lentor was also the one with most transactions in March, selling 69 transactions.
We could see a slight increase in second quarter of the year as more major projects are put on the market. The second quarter of the year will witness a slight rise in sales, as more major projects come to market.