Home sales hit record lows in 2008 but new launches are on the cards

The year gone by was one to forget for developers as they managed to sell just 4,351 homes in 2008, representing the lowest figure in at least 10 years – diving beyond the previous troughs of 5,156 and 5,520 units in 2003 and 1998 respectively.

The sales in 2008 were also significantly lower than the annual 10-year average (1998-2007) of 8,200 units.

Developer sales fizzled out in the last month of 2008, registering just 131 transactions – less than five a day.

The number of projects with licences for sale in December has, however, risen to 8,350 units, up from 6,512 units in the previous month.

Only 157 new homes were launched in December, the lowest figure since developer data was made available in mid-2007. CBRE Research executive director Li Hiaw Ho said: ‘This shows that developers kept their launch activity to a minimum as they monitored the market.’

But not all developers held back.

Macly Capital sold 43 units of the 104-unit Newton Edge on Makeway Avenue at the median price of $1,200 psf. Mr Li said the strength of the project lay in the affordable quantum of $500,000 to $900,000 for a majority of the units due to their small sizes ranging from 440-915 sq ft.

Pricing is likely to have been a factor also. An earlier report by UBS noted that Newton Edge was priced lower than VIVA at Suffolk Walk nearby, where 15 units were sold in Q3 2008 for around $1,550 psf.

Hayden Properties’ The Ritz-Carlton Residences in Cairnhill also chalked up healthy sales at what appeared to be discounted prices. Eight units were sold at a median price of $3,086 psf.

Hayden Properties director (sales and marketing) David Neubronner revealed that the buyers comprise project shareholders and directors, with just one third-party transaction.

‘The purchase prices by the related parties are preferential rates, and the purchase price paid by the third party reflects current market pricing,’ he said.

Mr Neubronner added that the unit purchased by the third party is located on a lower floor and was priced at $3,700 psf, which is only an 8 per cent decrease from the initial launch price of $4,000 psf.

Colliers International director for research and advisory Tay Huey Ying noted that mid-tier projects in the Rest of Central Region (RCR) dominated launches in December, accounting for 72 per cent of the units launched during the month. ‘This, following the domination of high-end projects in recent months, could be an indication of the weakening holding power among small and mid- tier developers,’ she added.

RCR projects that sold in the month include 10 units at Nova 88 at a median price of $988 psf and nine units of The Aristo @ Amber at a median price of $1,002 psf.

‘This decline in demand has led to the contraction in the islandwide URA property price index (PPI) of some 5.6 per cent as the market attempts to generate more activity through price reductions,’ said Jones Lang LaSalle local director and head of research (South East Asia) Chua Yang Liang. ‘Historically, take-up has been leading the PPI. On the back of this contraction in take-up in Q4′08, we can expect the PPI to contract further, possibly by another 5-7 per cent in Q1′09,’ he said.

Nevertheless, some developers have been continuing to prepare developments for launch.

UOL is expected to launch a 646-unit development at Simei Street 4 billed as a luxury condominium for upgraders in the first half of 2009.

Frasers Centrepoint is also preparing to launch a development on Boon Lay Way. A spokesman said: ‘Caspian, our 712-unit development on Boon Lay Way, is launch-ready. At this point, we are still finalising several details, with regard to the actual launch period, pricing, etc, and will announce them once we are ready.’

It is also understood that Far East Organization is preparing to launch a development in Choa Chu Kang this year.

Notably, all developments are in the Outside Central Region where property prices are not expected to fall as significantly as in the mid-tier and high-end segments.

Source : Business Times – 16 Jan 2009

THE grey clouds hovering over the private property market here have gotten even darker.

Islandwide launches of new private homes last month slumped to a record low since the Urban Redevelopment Authority (URA) started releasing the monthly data in June 2007. Developers placed just 157 units for sale last month, down nearly60 per cent from November. And out of these, they managed to sell 131 units.

“Looking at the numbers for the period from October to December, they have been quite consistently low,” said Mr Donald Han, managing director of Cushman and Wakefield. “It is reflective of a subdued market suffering from the cold winds of the financial market.”

For the whole of last year, 4,370 private homes were sold, less than a third of 2007’s 14,811 units.

Mr Colin Tan, research director from Chesterton Suntec International, said: “It tells you one thing, the market is unhealthy. While it is easy to blame the festive period for a dip in sales, it is so low that there is nothing normal about it. Sales of new units have been so low for the past three months that you cannot even excuse it as a blip.”

Based on the latest URA data, it is evident that some developers have been reducing prices to lure buyers.

A total of eight units of the luxurious Ritz Carlton Residences, located at Cairnhill Road, were sold at a median price of $3,086 per square foot. This represents a 40-per-cent discount from the median selling price of three units at $5,088 psf in Dec 2007.

Mr Tan said: “Prices will be coming down, but how it unfolds could be decided by the banks.” He warned that if unemployment rises, more homes might be seized by banks to be sold off to recoup losses, putting more downward pressure on prices.

Source : Today – 16 Jan 2009