Developers got off to a good start in housing sales this year, based on the latest government numbers, and industry players are sanguine this will set the tone for the rest of the year as well.
Urban Redevelopment Authority data shows that developers moved 381 private homes (excluding executive condominiums or ECs) in January - up 3.8 per cent from December's 367 and 17.6 per cent higher than the 324 in January 2016. The year-on-year (y-o-y) sales improvement contrasts with the report card for January 2016, with declines of 15.6 per cent month on month (m-o-m) and 13.8 per cent y-o-y.
Despite the lead-up to the Chinese New Year festivities last month, market sentiment and outlook at the beginning of 2017 are more positive than at the start of 2016, when sentiment took a dive amid stock market volatility. The pick-up in sales last month was all the more noteworthy because there was just one fresh launch - 12 on Shan, a 78-unit project where 30 units were released but none sold.
Property agents are expecting primary-market sales to rev up in the coming weeks. Developers have lined up several launches to ride on the current wave of sentiment improvement.
First off will be The Clement Canopy in Clementi, where sales bookings are slated to start on Feb 25. This is expected to be followed by Grandeur Park Residences next to Tanah Merah MRT Station. Park Place Residences at Paya Lebar Quarter, next to Paya Lebar Circle Line MRT Station, and Seaside Residences in Siglap are targeted for release in the March-April period.
In the EC segment - a public-private housing hybrid - sales booking at Qingjian's iNZ Residence in Choa Chu Kang is scheduled to begin in March.
Despite these fairly sizeable projects over the next two months, agents suggest that there would be sufficient depth of buying demand, given the diversity of locations and target buyers for the various developments.
URA's data released on Wednesday shows that developers sold 184 ECs last month, down 13.6 per cent from the previous month but up 17.9 per cent y-o-y.
Eugene Lim, ERA Realty Network key executive officer, predicts that developers would sell 600-800 private homes and 200-300 EC units this month.
A more active first quarter for developers is expected this year than the same period in 2016, building on the pick-up in sales momentum from last year. If sustained, this will pave the way for higher sales in 2017, estimated at 8,000 to 9,000 private homes - above the 7,952 units that developers sold in 2016.
However, housing affordability would be clipped when the US Fed raises interest rates. Geopolitical tensions and currency movements will also have an impact on housing demand.
On the whole, the uncertain external environment as well as a slower economy at home will put a lid on housing demand and prices - despite cautious optimism among buyers in the market.
Developers will be mindful of buyers' price sensitivity in terms of absolute-quantum price - given the total debt servicing ratio framework - when determining prices for their new launches. Even though a large number of new units are being released in the next couple of months, it is unlikely to exert upward pressure on the URA's overall private home price index.
With the dearth of launches last month, buyers continued to invest in the large array of existing projects.
Developers' top-selling private housing project in January were Parc Riviera (38 units at a median price of S$1,270 per square foot), The Santorini (30 units at S$1,066 psf) and The Trilinq (25 units at S$1,339 psf).
In the EC segment, where there were no fresh project launches last month, The Terrace topped new EC sales with 41 units taken up at a median price of S$779 psf. At Sol Acres, 40 units were transacted at S$797 psf and at The Vales, 17 units at S$827 psf.
Adapted from: The Business Times, 16 February 2017