SINGAPORE - Sales of new private homes by developers plunged 51.7 per cent in October from the previous month, putting the brakes on a five-month-long buying spree after new curbs were imposed on the re-issue of options to purchase (OTPs).

Buyers took up just 642 units in October from a more than two-year high of 1,329 units in September, according to figures from the Urban Redevelopment Authority (URA) on Monday (Nov 16).

Year on year, private home sales fell 31.1 per cent from 932 units in October last year.

The figures from the URA on Monday (Nov 16) exclude executive condominium (EC) units, which are a public-private housing hybrid.

New rules imposed on Sept 28 by the URA restricted developers from re-issuing OTPs to the same buyer of the same unit within 12 months after the expiry of the earlier OTP.

They are also restricted from providing upfront agreements to buyers to re-issue OTPs.

The move is aimed at restricting a property market practice believed to have been inflating private home sales figures, while encouraging financial prudence in home buying amid a Covid-19 economic slump and uncertain employment climate.

The re-issuing of OTPs refers to an arrangement some private home buyers make with a developer, via a property agent, to continually re-issue OTPs upon expiry - without any forfeiture of the booking fee.

In the past, this could be done for up to a year - or even as long as up to 18 months - from the date of the first OTP. The idea was to give the buyer time, for instance, to sell his existing home.

The plunge in sales could also be attributed to the sharp fall in new units up for booking.

The number of new private homes launched sank 68.4 per cent to 423 in October, down from 1,340 in September. This was lower even than the number launched during the circuit breaker months of April (640 units) and May (615 units), and was the lowest since December last year.

The only new project to be launched last month, the 319-unit Hyll on Holland, saw five units sold.

If ECs are included, 682 new units were sold last month, down 50.8 per cent from September and 28.9 per cent from a year ago, URA data showed.

The top selling project last month was The Garden Residences in Serangoon North, which shifted 53 units at a median price of $1,612 per square foot.

Ms Christine Sun, OrangeTee & Tie's head of research and consultancy, said the new OTP curbs caused a knee-jerk reaction that resulted in a temporary fall in sales volume.

"As the property market is highly sentiment driven, the pull-back in housing demand is unsurprising. Some buyers could be waiting on the sidelines, hoping that developers will moderate prices in response to the sales decline," she said.

Those who are directly impacted by the new regulation might need time to settle outstanding issues in order to proceed with their home purchase, added Ms Sun.

"For instance, HDB upgraders who may incur the additional buyer's stamp duty (ABSD) will try to dispose their flats first. They are likely to rent elsewhere or make alternative housing arrangements with their extended families in the interim as they wait for the completion of their new homes. Sales may pick up again after the dust settles."

Huttons Asia's director of research Lee Sze Teck agreed that buyers had waited last month to see if developers would adjust their prices.

He noted also that The Linq @ Beauty World sold more than 96 per cent of its units on the first day of its launch over the past weekend. "The sales were across all unit types and further proved that there are many buyers in the market who do not require re-issue of options."

Mr Nicholas Mak, ERA Realty's head of research and consultancy said the new OTP restrictions are reiterations of existing regulations rather than property cooling measures. "Therefore, it is likely to be just a speed bump in the road to recovery from the effects of Covid-19 for the property market."

Ms Sun added that more foreign buyers could return to Singapore's property market in the coming months as the economy continues to re-open and travel gradually picks up again.

Property analyst Ong Kah Seng said that the upcoming air travel bubble between Singapore and Hong Kong might nudge more Hong Kongers towards buying properties here.

PropNex chief executive Ismail Gafoor expects new homes sales in November and December to do better than last month, in view of upcoming launches, including The Landmark, Clavon, and Ki Residences.

"For the whole of 2020, we project that developers' sales could reach 9,500 units, slightly below the 9,912 units transacted in 2019," he said.