DEVELOPERS in Singapore sold 998 new private homes in June, 105 per cent more than May’s 486, on pent-up demand and an increase in foreign buying as show galleries reopened.
Despite the surge, buyers are choosing to remain prudent, with affordable homes making up over 90 per cent of units sold.
The transactions in June were the highest sales for the month in seven years, while the number of foreign buyers rose to the highest in 10 months, according to Christine Sun, OrangeTee & Tie’s head of research and consultancy.
The previous June high was in 2013 with 1,806 units.
The 105 per cent jump in June from May was also higher than the 75.5 per cent month-on-month (m-o-m) increase seen in May, data from the Urban Redevelopment Authority (URA) showed on Wednesday.
June’s 998 sales were also 22 per cent higher than the 821 units transacted a year ago.
Including executive condominiums (ECs), sales jumped 102.2 per cent from 510 units to 1,031 units over the same period, surpassing the 74.1 per cent m-o-m increase in May.
Typically, June is slow because it’s the month-long mid-year school break when families vacation overseas but this year was the first time that people could not travel due to Covid-19 restrictions.
The usual mid-year holiday period was moved to May because of the “circuit breaker”, with schools reopening in June.
Last month saw 169 purchases by foreigners, made up of 120 permanent residents (PRs) and 49 non-PRs, said Ms Sun, who crunched the data. The previous high was in August 2019 with 188 foreign buyers.
Buyers remained largely prudent though, with 919 suburban homes sold out of the total 998 transactions – comprising 489 in outside central region (OCR), and 430 in rest of central region (RCR). There were 79 units in the posh core central region (CCR).
In May, sales for OCR, RCR and CCR were 256, 189, and 41 respectively.
In Q2 2020, OCR posted a 4.2 per cent increase over Q1 2020 while RCR and CCR suffered declines of 10.7 per cent and 60.4 per cent respectively, said Ong Teck Hui, JLL senior director, research and consultancy.
“The OCR submarket has proven to be more resilient due to more affordable pricing of OCR projects and demand from HDB upgraders,” said Mr Ong.
The three top-selling projects last month were the mass market developments located in the OCR – Treasure At Tampines, Parc Clematis and The Florence Residences.
On the increase in foreign buyers, Ms Sun said that the growing macro-economic uncertainties have driven these investors to safe-haven assets here.
“Currently, many foreigners snap up homes in Singapore based on their trust in our legal system, quality of finishes, and investment potential of properties,” she explained.
June also saw some of the priciest homes sold.
There were seven new non-landed homes sold above S$5 million in June 2020, of which two were above S$10 million, said Ms Sun.
The number of private homes transacting at S$2 million and above rose from 23 units in May to 129 units in June. In terms of proportion to total sales (excluding ECs), it made up 13 per cent in June, up from May’s 5 per cent.
Two were sold above S$10 million: a 257 sqm 5th floor unit at Boulevard 88 for S$10.2 million or S$3,680 psf, and a 504 sqm 12th floor unit at 15 Holland Hill for S$15 million or S$2,765 psf.
The previous high was a 562 sqm 28th floor unit at Boulevard 88 that was sold for S$31 million or S$5,125 psf in June 2019.
Despite the deep recession, some consultants are hopeful that the residential market is normalising as recovery gathers pace, though prices continue to weaken.
Based on the monthly average of around 889 new sales throughout 2019 and about 752 new sales in Q1 2020, the growing activity has more than normalised to pre-Covid-19 levels by June 2020, demonstrating the resilience of the market, said Leonard Tay, Knight Frank Singapore head of research.
Overall private residential prices have decreased by a rather mild 2.1 per cent (based on flash estimates in Q2 2020) in the first six months of 2020, he noted.
In the second half of 2020, with the phased relaxation of restrictions, transaction volumes should stabilise around pre-Covid-19 levels, though the spectre of the virus still looms, added Mr Tay.
“We estimate there could be up to 20 new launches (around 6,000 units) in H2 2020 with Cairnhill 16 first to hit the road on July 17,” said Lee Sze Teck, Huttons Asia, director, research.
While the economy contracted by 12 per cent in Q2 2020, economists have agreed that the worst is over and recovery is on the cards, he said.
“The resilience in the market and property as an endearing asset class among investors will drive sales in the market,” added Mr Lee.
Nicholas Mak, ERA Realty head, research and consultancy, thinks sales this year could range between 8,000 and 9,000 units.
But Tricia Song, Colliers International head of research for Singapore, warned that after the initial pent-up demand, sales could start to slow as job losses and economic realities sink in.
“We expect 2020 developer sales to fall 29 per cent to 7,000 units from the 9,912 units in 2019,” she said.
“With home prices highly correlated to household income and job security, we expect private residential prices could decline 5 per cent in 2020, in line with the economic contraction,” Ms Song added.
Desmond Sim, CBRE head of research, Singapore and South-east Asia, believes that sales momentum may be impacted by the recession. His forecast is for 2020 sales to fall between 5,000 and 6,000 units (excluding ECs).