In May, new private home sales fell to their lowest level since records began in June 2007. The sales were down by more than 80 percent year-on-year.
The marketing of major projects was not as strong last month, when the slowdown in mid-year sales was compounded by sales sagging in the last few months.
Data published by the Urban Redevelopment Authority (URA) on Tuesday (Jun 18) revealed that developers sold 221 condo units in May, which is down 78.7 percent year-on last year, compared to 1,039 units sold a year ago.
The most recent May sales figures that excludes executive condos (ECs) is also 26.6 per cent less than the 301 units that were sold in April.
The sales in May were the lowest seen in the past three months, and also the lowest sales recorded for May since 2008 where 453 units were sold.
Including ECs, 261 units were sold in May. There were 248 units launched, versus the 1,595 units launched the same month of 2023. In comparison, 352 units were sold while 278 units were launched in April 2024.
May sales figure in 2023 was helped by two major launches – 99-year leasehold The Continuum in District 15 with 816 units and 99-year leasehold The Reserve Residences in District 21 with 732 units.
In May of this year, no major projects were announced within the suburbs or city fringe. These houses are generally cheaper and more accessible than the prime segment.
The school holiday slowdown has passed, primary market sales have decreased significantly.
Developers have sold on average 8,853 private housing units annually over the last 10 years. This is an average monthly of 738 units. Developers sold only 1,697 housing units over the initial five months of of 2024. This is far below the volume of sales required for the annual average of 8,853 housing units.
Analysts have trimmed their forecasts because of the slump in sales recently. In the beginning of the year, Knight Frank projected primary sales numbers would range from 7,700 and 9,900 units by 2024. However, the estimate has since revised to less than 7,000 units.
CBRE sliced its forecast for new home sales to 5,500 to 6,500 units, down from 7,000 to 8,500 units. In turn, prices for private homes which are up 1.4 per cent quarter on quarter in Q1 may rise in a more gradual manner throughout the year.
Mak has predicted that primary market sales could fall to levels similar to those as seen in 1998, which was in the Asian Financial Crisis. In 1998, only 6,096 units were sold.
The amount is likely to be subdued, until mortgage rates decrease or if the government eases certain cooling measures.
Prices will still grow by 3-4 percent by 2024. With balance sheets of households being robust and inventory levels at a low level, there is no need to anticipate major changes. The recovery in sales for developers is expected to take place only by 2025.
Two small projects that are freehold, the Straits At Joo Chiat and the 999-year leasehold Jansen house in District 15, both having 21 units, were announced in May. Jansen House sold three units with a median of $2,098 psf, while Straits At Joo Chiat sold two units for a median psf of S$2,091.
A 99-year leasehold Skywaters Residence unit was sold to a foreign buyer for S$47.3m or S$6,100 for each square foot in the month of March. This means the buyer forked out S$28.4 million in Additional Buyer’s Stamp Duty. Shenton Way has not yet been launched publicly however it was marketed to a select group of customers.
In total, only 15% of the 1,595 units that were sold in the month of May 2023 sold last month. It’s also smaller than the 278 units launched in April 2024.
URA data showed that the suburb Outside Central Region (OCR) that is the third segment of the market was the top choice for condo and private apartment purchases, with 63,8 per cent of all sales in May.
The rest of Central Region or the city fringe was responsible for about 30 percent of the primary sales. The Core Central Region, which was responsible for 12.2 percent of new sales in the last month, was the third-placed region.
The top 10 projects which performed the most well during May were all current projects, mostly located in the OCR or RCR. This indicates that buyers are becoming more price-sensitive amid the downturn in economics and high mortgage interest rates.
The most sought-after project in the District 26 was Lentor Hills residence, a 99-year leasehold development. 25 units were offered at a median of S$2,164 per square foot.
The Lentor area also saw the highest volume of sales with 69 transactions this month.
We could see an increase of a small amount in the second half of this year, as larger projects are introduced to the market. This includes bigger projects like the 99-year leasehold Emerald of Katong in District 15 and 99-year leasehold The Chuan Park in District 19, both with over 800 to 800 units.