In May, new residential sales of homes fell to their lowest since records started in June 2007. The sales were also down by around 80 percent from year to year.
There were no major projects marketed last month, when the seasonal lull in mid-year was further exacerbated by sales slowing in recent months.
Data published by the Urban Redevelopment Authority (URA) on Tuesday (Jun 18) showed that condo developers sold 221 units in May, which is down 78.7 per cent year on one year compared to the 1,039 units sold one year ago.
The figures for May’s sales including executive condominiums (ECs), are also lower by 26,6 % than the 301 units sold in April.
May sales were the lowest in the last three months and since 2008 when 453 units sold.
With ECs including ECs, 261 units were sold in May, with 248 units launched compared to the 1,056 units sold and 1,595 units launched the same month of 2023. Comparatively, in April 2024, 352 units sold and 278 were launched.
The May 2023 sales figures were boosted by the launch of two new developments – The Continuum, a 99-year-leasehold project in District 15 with 816 units, and The Reserve Residences (99-year-leasehold) A 732-unit development located in District 21, which has 792 years of leasehold.
However, in May of this year there was no significant project launches in the suburbs or city fringe. These areas are generally cheaper and more accessible than homes in the main segment.
School holiday lull aside sales at the primary market have been slowed significantly.
In the past 10 years, developers have sold an average of 8,853 private housing units each year, which works out to a monthly mean of 738 units. In the first five months of 2024 developers have sold only 1,697 units. This is well below the sales volume required to reach the average annual sales of 8,853 units.
Analysts have trimmed their forecasts because of the slump in sales recently. In the beginning of the year, Knight Frank projected primary sales volumes would be between 77,000 to 9,000 units by 2024. However, the estimate has since revised to less than 7,000 units.
CBRE cut its forecast for new home sales to 5,500 to 6,500 units, down from 7,700 to 8000 units. The same is true for residential prices in private, which are up 1.4 percent quarter on quarter in Q1 may rise with a slower rate for the rest of the year.
Mak believes that sales on the primary market could fall to levels as seen during the 1998 Asian Financial Crisis, when only 6,096 new units were sold that year.
The volume is expected to decrease, unless mortgage rates drop or the government eases some cooling measures.
Prices will still grow by 3 to 4% by 2024. With balance sheets of households being able to withstand the pressure and inventory levels low and inventory levels low, there’s no reason to expect any major corrections. The recovery in sales for developers is expected to take place in 2025, but only.
In May, two tiny projects were marketed – the 999-year leasehold Jansen House in District 19 that has 21 units, and the freehold Straits At Joo Chiat in District 15 that has 16 units. Jansen House sold three units for a median of S$2,098 per square foot. Straits At Joo Chiat sold two units for a S$2,091 median psf.
One of the units was sold by 99-year leasehold Skywaters Residence last month to a foreign buyer for S$47.3 million or S$6,100 psf. The buyer paid S$28.4million in stamp duty. The Shenton Way project has yet to be publicly launched and was marketed to selected clients.
In total 248 units were put up to the market last month which is less than 15.5 percent of the 1,595 units that were launched in May 2023. This is also slightly lower than the 278 units launched in April 2024.
URA data revealed that the suburb Outside Central Region (OCR), that is the third segment of the market was the most popular in condo and private apartment purchase, accounting for 63,8 per percent of sales May.
This was followed by the Rest of Central Region (RCR) or city fringe, which accounted for around 30 per cent of primary sales, and the prime Core Central Region (CCR) comprising 12.2 percent of new sales in the month of March.
The 10 top projects which performed the most well in May were all current projects, mostly located in the OCR or RCR. This indicates that buyers have become price sensitive amid economic weakness and the high mortgage rates.
The most well-known project in the District 26 was the Lentor Hills residence, a 99-year leasehold development. 25 units were offered at a median of S$2,164 for each square foot.
The Lentor area also witnessed the highest volume of transactions with 69 this month.
We can expect an increase of a small amount in the later in the second half of the year as more major projects are brought to the market. The second quarter of the year is expected to see a slight increase in sales as more significant projects are launched.