Updated: Apr 6
In February, sales of new private residential units picked up speed, with a surge in sales in the prime core central region (CCR). However, overall sales remained lower compared to the previous year.
According to data released by the Urban Redevelopment Authority (URA) on March 15th, developers sold 432 units (excluding executive condominiums) in February, which is an increase of 9.9% from the 393 units sold in the previous month. The rise in sales occurred despite a dip in the number of units launched in February, with 2.2% fewer properties launched than the 410 units launched for sale in January.
In comparison to the same period last year, the number of units sold in February was 20.3% lower than the 542 units sold in 2022. However, the number of units launched in February increased by 105.6% from the 410 units launched in the same month in 2022.
In total, including executive condominiums, 470 units were sold in February, down from the 550 units sold in January and 574 units sold in February 2022.
The majority of transactions in February occurred in the CCR, accounting for 51.4% of total sales with 222 units sold (excluding executive condominiums). This is a significant increase of 40.5% from the 158 CCR units sold in January.
According to Marcus Chu, the CEO of ERA Realty, the surge in sales can be attributed to some condominium projects in CCR that are expected to be completed this year, attracting buyers who prefer newly completed or nearly finished projects. He also mentioned that rental prices in CCR have significantly increased over the past year, leading some tenants to buy new residential properties instead of risking further rental hikes.
ERA also observed an increase in the number of luxury condos priced at S$5 million or more sold by developers in February. Out of the 31 new luxury condos sold last month, approximately half of the units were purchased by Singaporeans.
Tricia Song, the head of research in Southeast Asia for CBRE, noted that seven of the ten best-performing projects in February were located in CCR and on a freehold tenure. This indicates that buyers still find value in CCR despite the narrowing price gap between new launches in CCR and the rest of the central region (RCR).
Christine Sun, the Senior Vice President of Research and Analytics at OrangeTee & Tie, noted that despite the challenges of high interest rates, cooling measures, and the launch of only one mid-sized and one small project in February, the overall sales performance was encouraging. Most launched projects in CCR continued to clear their unsold units last month, according to OrangeTee.
Sun also pointed out that the increase in Buyer's Stamp Duty (BSD) on Feb 14 would likely have a greater impact on the primary market, which has a higher price quantum than the resale market. However, she suggested that most buyers may not consider the BSD increase excessive, especially if it's expressed as a percentage of the total purchase price and if the homes are intended for owner occupation or long-term investment.
Lee Sze Teck, the Senior Director of Research at Huttons, used the example of Terra Hill to illustrate that buyers are not deterred by the marginal increase in BSD, viewing it as a wealth tax. Terra Hill was launched after the BSD increase and went on to sell 97 units, making it the best-selling new project in February.
Huttons noted that foreign buying remained elevated at 12.6% in February, above the 7.1% level for the whole of 2022. Huttons' ground intel suggested that Chinese buyers purchased some units in luxury projects in the CCR, supporting sales.
In the RCR, 163 units were sold, while sales outside the central region (OCR) fell 74.7% from January to 47 units, with no new projects launched in the region. In February, the RCR had the highest number of units launched at 294, followed by 107 units in the CCR, and no units were launched in the OCR for the month.
According to Wong Siew Ying, head of research and content at PropNex Realty, sales in April and May could see a more significant increase as more fairly-sized new projects such as Tembusu Grand, The Continuum, Lentor Hill Residences and The Reserve Residences are set to launch. Huttons’ Lee expects Blossoms by the Park and The Reserve Residences to sell more than half their units on launch day due to strong demand for private homes in the one-north area that are near MRT stations and primary schools.
Wong also noted that buyers have become more cautious due to uncertainty surrounding future rate hikes and the long pipeline of new launches this year. She predicts that take-up rates for future launches will be similar to the two most recent launches, with developers facing rising costs due to high land costs. JLL's Chia Siew Chuin believes the lower year-on-year sales are due to buyers waiting for more options among upcoming project launches, while Edmund Tie's Lam Chern Woon suggests that upward price pressures are likely to be contained due to buyers remaining price-sensitive amid economic uncertainties.
Huttons maintains its sales forecast for 2023 at around 9,000 units, with prices expected to rise by up to 5%. Although the impact of Silicon Valley Bank is not expected to be significant on the property market, property purchases could receive a boost if the Federal Reserve slows down or stops its interest-rate hikes, leading to better interest rates for local borrowers, according to Huttons’ Lee.