Home launches and sales in suburbs shrink dramatically

A BRIGHT SPOT: The 396-unit Inflora on Flora Drive launched last October quickly shifted 388 units at a median price of $952 per sq ft. But developers largely shied away from new launches in the second half of last year.
A BRIGHT SPOT: The 396-unit Inflora on Flora Drive launched last October quickly shifted 388 units at a median price of $952 per sq ft. But developers largely shied away from new launches in the second half of last year.ST FILE PHOTO

Figures at their lowest since 2008 as loan curbs cool market sentiment

Suburban projects saw a sharp slowdown in the second half of last year, a Straits Times analysis has found.

Both unit launches and unit sales in the six-month period plunged to their lowest levels since the depths of the financial crisis in the second half of 2008, figures compiled by Jones Lang LaSalle show.

This happened after the Government capped debt-to-income ratios in late June last year under what it called a total debt servicing ratio (TDSR) framework.

The take-up rate for mass market private homes in July through December last year also slid to its lowest point since the first half of 2008.

"In general, the sales progress of most projects launched after June 2013 tend to be slow," Jones Lang LaSalle Singapore research director Ong Teck Hui said yesterday.

"Before TDSR was imposed in June 2013, projects that were priced realistically had no problems in achieving a substantial take-up within a reasonable time frame."

Mr Ong added that projects that were priced "more optimistically" by developers would now find it even more challenging to move units "unless prices are tweaked more attractively".

The few bright spots late last year, such as The Inflora, managed to sell well due to relatively low prices, he said.

The 396-unit Inflora on Flora Drive launched in October and quickly shifted 388 units at a median price of $952 per sq ft (psf).

Developers largely shied away from rolling out new launches in the second half of last year due to poor market sentiment on the back of TDSR.

Only 2,796 suburban private homes were launched for sale in the second half of last year.

This was a drop of more than half from the 6,309 units launched in the first half of the year.

New home sales in the outskirts fell in tandem, at an even steeper pace.

New suburban homes sold came up to 2,228 units during that period, shrinking 64 per cent from the 6,143 units that were moved in January through June last year.

Dividing home sales over units launched works out to a take-up rate of 80 per cent for the six-month period.

This was also the lowest take-up rate seen since the rate of 65 per cent in the first half of 2008.

Mr Ong said that some suburban new launches likely suffered a lukewarm response in the second half of last year owing to pricing issues.

Their prices "were probably set too close to pre-TDSR levels, whereas demand has moderated significantly", he said.

The suburban non-landed project with the biggest proportion of unsold units as at the end of last year was the freehold The Quinn on Bartley Road, according to data from the Urban Redevelopment Authority (URA) website.

The Quinn, which launched in July last year, had moved only 17 of its 139 units, which means nearly nine in 10 units were unsold at year-end.

The most recent sale at the project was of a 570 sq ft unit at a price of $1,624 psf last month, according to caveats lodged with the URA.

Other projects with poor sales so far include The Skywoods, which was launched in September last year.

The 99-year leasehold project sold only 59 units, or 14 per cent, of its total 420 units as at Dec 31.

melissat@sph.com.sg

 

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