Residential market on the upswing

820 new homes sold last month a 53% rise from last June, pointing to pick-up: Analysts

JLL's Ong Teck Hui said data showed the market has regained confidence and that a pick-up is expected this month with the resumption of new launches like Martin Modern (above).
JLL's Ong Teck Hui said data showed the market has regained confidence and that a pick-up is expected this month with the resumption of new launches like Martin Modern (above). PHOTO: GUOCOLAND

Analysts believe the residential property market is in the pink of health after a substantial jump in new home sales.

Developers sold 820 new homes last month, a 53 per cent surge from June last year, when only 536 new private homes were bought.

Although last month's figure was a 21 per cent decline from the 1,039 units sold in May, this is a less significant comparison.

Analysts said that June, the school holiday month, is usually a lull period for the market, making year-on-year comparisons a more accurate take on sales momentum.

Still, following three straight months of sales above 1,000 units, June was the first month to see transactions fall below 1,000. However, developers launched just 159 homes - excluding executive condos (EC) - last month, roughly half the 370 homes launched in May.

Mr Ong Teck Hui, JLL's national director of research and consultancy, noted that on a quarterly basis, the sale of 3,426 units in the second quarter is the strongest quarter since the second quarter of 2013, just before the total debt servicing ratio (TDSR) framework was imposed by the Government.

He said there was a "significant recovery" in sales volumes. As at mid-year, 6,388 units have been sold by developers, almost 74 per cent more compared with the 3,675 sold in the same period last year. He said: "The analysis points towards a market that has regained confidence and recovered substantially in transaction volume. A pick-up in activity in July is expected with the resumption of new launches, including Martin Modern and Le Quest."

The top-selling private residential project last month was The Santorini in Tampines - moving 75 units at a median $1,026 psf.

In the EC segment, 244 units were sold, down 35 per cent from the 370 units sold in May - a healthy figure considering that there was no new EC project launched in the second quarter. The best performer was Sol Acres, which moved 41 units at a median price of $829 psf.

Mr Desmond Sim, head of research at CBRE, noted that there was an "uplift in sales" at previously launched projects "despite no discernible price adjustments".

"It seems that the performance of the recent government land sale tenders may have affected buyer sentiment," he said.

A high land bid of more than $1 billion for a Stirling Road site in May could have lifted sales in the vicinity - projects like Commonwealth Towers sold an impressive 47 units last month, at a median price of $1,899 psf, he added.

"There are general concerns that higher land prices may eventually be translated into higher unit prices. As such, buyers seem to be motivated by concerns about catching the wrong side of the market."

While overall private property prices have declined for 15 straight quarters and rents are still soft, Mr Nicholas Mak, head of research and consultancy at ZACD Group, said prices could rise with a looming undersupply situation. There were 4,208 units of launched and unsold private housing units last month, the lowest since January 2011, he said.

"If the inventory of unsold units were to... dwindle, it could provide some developers with the excuse to increase prices," he said.

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A version of this article appeared in the print edition of The Straits Times on July 18, 2017, with the headline Residential market on the upswing. Subscribe