Jan 2011 private home sales down 11% as new rules take effect

Published 16 February 2011
The Business Times
By Emilyn Yap

Developers managed to sell a respectable 1,189 private homes in January – down 11 per cent from 1,332 in December – as measures to cool the property market rained on the home-buying parade only in the middle of the month.

Jan private home sales down 11% as new rules take effectBut some market watchers expect the new rules to continue exerting pressure on sales. Already, deals for at least 52 units across more than 10 projects did not go through in January.

Some consultants foresee developers selling around 1,000 units or less when February draws to a close.

Fresh data from the Urban Redevelopment Authority (URA) yesterday showed that sales were concentrated in the suburbs – some 49 per cent or 588 units were in the outside central region.

Developers offloaded 401 units in the rest of the central region, and another 200 units in the core central region.

Including executive condominiums (ECs), developers would have sold 1,534 units in January – 10 per cent less than the 1,699 in December.

Well-received projects last month include Canberra Residences (which sold 155 units), Prive (217 units), Spottiswoode 18 (204 units), and The Tennery (105 units).

Several industry observers believe that the property cooling measures will continue working their way through the market, since they came into effect only on Jan 14.

In the 30-day period after tightening policies are introduced, sales volume typically contracts by 25-30 per cent, said Jones Lang LaSalle research head for South-east Asia and Singapore Chua Yang Liang.

With sales in January shrinking 11 per cent, another 15-20 per cent drop in February is possible. This means that developers could sell 950-1,000 units (excluding ECs) this month, he explained.

Cushman & Wakefield senior manager of Asia-Pacific research Ong Kah Seng expects developers to sell 900-1,100 non-EC private homes in February, while Knight Frank consultancy and research head Png Poh Soon estimates 1,000 or slightly lower.

CBRE Research executive director Li Hiaw Ho was slightly more sanguine. As upgrader-type projects such as My Manhattan, H2O Residences, and Hedges enter the market in February and March, ‘we expect demand to be comparable to January’s level and home prices to remain reasonably stable’.

For a group of buyers, the cooling measures have given them cold feet. A quick scan of URA’s data showed that buyers of at least 52 units across more than 10 projects dropped their purchases in January.

CBRE also observed that there were aborted cases for some new launches in December last year and the early part of January.

Projects with units surrendered last month include The Tennery (13 units), Prive (nine units), Robinson Suites (six units), Space @ Kovan (four units), and Nin Residence (four units).

Far East Organization is behind The Tennery. The developer’s chief operating officer for property sales Chia Boon Kuah said that returned units at the project ‘are mainly due to the cooling measures’. Currently, 314 of the 338 units there have been sold.

At Prive, BT understands that just one of the nine deals which fell through was due to the buyer pulling out because of the cooling measures. Another buyer could not meet certain EC purchase criteria.

As for the remaining seven units, their buyers are said to be changing loan structures and will go ahead with the purchases.

Knight Frank’s Mr Png noted that it is common for projects to have a few returned units, though the cooling measures would have made people think twice.

Especially for those who bought multiple properties, the risk could have become too high and they would rather forfeit the option fee, he said.

Another industry insider suggested that buyers could have walked away from deals in anticipation of home prices dipping later.

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