Pent-up demand drives new private home sales

Pent-up demand for new private homes in the suburbs fuelled a rebound in overall sales last month, and lifted the median prices of some new mass market condominiums to levels more commonly seen in prime and city fringe locations.

Thanks to robust sales at AMO Residence in Ang Mo Kio Avenue 1 - the only major launch last month - the suburbs accounted for the bulk of new home sales at 58.2 per cent, or 485 units.

Homes in the prime districts made up 22.2 per cent of sales, or 185 units, while the city fringe saw 19.7 per cent, or 164 units, sold.

Based on caveat data from the Urban Redevelopment Authority's (URA) Realis platform, the median price of new private homes in the suburbs jumped nearly 19 per cent to $2,088 per sq ft (psf) last month from June, Ms Wong Siew Ying, head of research and content at PropNex Realty, noted.

This was due largely to the nearly sold-out AMO Residence in Ang Mo Kio estate, which has not seen a condo launch in more than eight years.

With the sale of 366 out of a total of 372 units at a median price of $2,110 psf, AMO Residence set a new benchmark for leasehold suburban condos, analysts said.

In contrast, median prices in the prime district and city fringe areas were stable at $2,741 psf and $2,323 psf, respectively, Ms Wong said.

Data released by the URA yesterday showed that 834 residential units, excluding executive condominium (exec condo) units, were sold last month, up 70.9 per cent from 488 in June.

This was as buyers returned after the mid-year school holidays and as recent interest rate increases appeared not to dampen demand.

July sales, however, were 47.9 per cent lower than the 1,602 units sold in the same month last year when more than double the number of new homes were launched.

Including exec condo units, sales jumped 70.6 per cent to 846 units last month, from 496 in June.

Developers launched 402 new units last month, up slightly from 397 in June. But the number of new units launched fell 63.6 per cent from a year earlier.

The suburbs have seen a sharp drop in new condo supply. From January last year to June this year, there were only 1,305 units launched in the suburbs, down from 6,109 units in 2018 and 7,818 in 2019, OrangeTee & Tie senior vice-president of research and analytics Christine Sun said.

But pent-up demand for suburban condos from Housing Board upgraders remained strong as buyers may not have felt the pinch of higher monthly mortgage payments yet, owing to the progressive payment schedule for new condos, and with home loans tending to be smaller in the initial repayment period, Ms Sun pointed out.

JLL senior director for research and consultancy Ong Teck Hui said the undersupply of new units "has worked to the advantage of developers, who are able to enjoy encouraging sales and firm prices. Therefore, the outlook for potential new launches in the next few months appears promising".

Mr Lee Sze Teck, Huttons' senior director of research, believes that this month may be a quiet sales month as developers may hold back launches during the Hungry Ghost Festival, before resuming launch activity next month.

AMO Residence's strong showing bodes well for upcoming launches - GuocoLand's Lentor Modern (605 units) in Lentor Central and Frasers Property's Sky Eden @ Bedok (158 units) in Bedok Central, Ms Tricia Song, CBRE's head of research for South-east Asia, said.

"These new projects could see interest from upgraders and first-time home buyers who are largely unaffected by the recent round of cooling measures.

"However, rising macroeconomic uncertainties and mortgage rates could temper optimism in the second half of this year," she warned.