_Monthly Developer Sales - August 2022
The private residential market is in a strange place at the moment. There is ample demand from homebuyers comprising both HDB upgraders as well as new family formations whose housing aspirations remain high. Yet, new private home supply remains tight thus suppressing transactional volume. So, whenever a new launch occurs that captures homebuyers’ attention, crowds build up at the showflat and a substantial percentage of the units are taken up within the first 48 hours. However, when there are no new launches of high-rise projects, such as in the past month of August (according to the developer sales data that were released), new sales volume becomes tepid with only projects that had already been launched releasing some new units. The only new launches were from two smallish, landed projects consisting of six units each, at Mount Rosie Road and The Jardin Residences at Lorong Chuan.
The total number of private residential properties launched in August 2022 dropped by 66.7% to 134 units (excluding Executive Condominiums (ECs)), when compared to the 402 units in July 2022. In the Core Central Region (CCR), 104 new private residential units were launched, 24 units launched in the Rest of Central Region (RCR), and six units were launched in the Outside Central Region (OCR) in the month of August. In contrast, the number of new unit sales rose to 220 in the CCR, 127 units in the RCR and 90 units in the OCR, compared to the previous month when 185 new units were sold in CCR, 164 units in RCR and 485 units in OCR. Typically, reasons such as the Chinese Hungry Ghost month are given for developers being reluctant to launch projects and buyers reticent to make home purchases in the past month. Yet, in August 2021 there were 1,216 developer sales along with 836 launched units. And in 2020 when Singapore was steeped in the struggle with the COVID-19 outbreak, 1,258 units were sold by developers during the Hungry Ghost month with 1,582 units launched. The fact is, there are buyers who are keen on property purchases despite the cooling measures announced in December 2021, increasing interest rates, and the spectre of possible recessionary pressures in the not-too-distant future. And what keeps the aspirations of buyers from translating into sales volume is primarily a lack of new product with ongoing challenges in the construction sector, which continues to readjust from the pandemic.
Nonetheless, the monthly developer sales data in August does hold some promise of revitalisation for the luxury class of homes as characterised by the CCR. With the relaxation of the international border restrictions coupled with a revised framework from the government to attract top foreign talents across all industries, this could have contributed to the higher number of new homes sold in the CCR when compared to the other regions during the month. The average median pricing of new private residential units also increased 6.1% in August to S$2,942 psf from S$2,774 psf in the previous month.
Moving forward, there is strong anticipation for new projects such as the already-launched Sky Eden@Bedok, and the soon-to-be launched Lentor Modern, where the sales from both will be logged in September. Both projects are characterised by proximity to an MRT station, retail amenities and popular schools. After all, affluence as indicated by household net worth has been increasing steadily in the past decade, growing 74.3% from Q4 2011 to Q4 2021, or at a compounded annual growth rate (CAGR) of 6.5%. The liquid holdings of households comprising cash and deposits expanded by 96.1% or at a CAGR of 7.0% in the same period. With earlier generations of Singaporeans becoming wealthy from the days of independence to a developed economy, capital inevitably gets recycled from an older generation to the next. Given the gradual build-up of wealth among Singaporeans, new launches with such attributes will attract homebuyers in the remaining months of 2022.
Based on the monthly developer sales data in July and August, together with the 4,222 new sales registered in H1 2022, about 5,493 primary sales have been accounted for in the first eight months of the year - on track to reach around 8,000 to 9,000 units for the whole of 2022 as originally anticipated at the beginning of the year.
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