Further drop in new home sales and launches in April

[Ahyoo2002]

May 16, 2008

 

Further drop in new home sales and launches in April

Prices also show signs of weakening as buyers adopt a more cautious stance

 

By Fiona Chan

THE private home market continued to weaken last month, with launches of new homes falling to their lowest level in at least 10 months.

Sales volumes and median prices also dipped, according to monthly figures released by the Urban Redevelopment Authority yesterday.

 

Developers launched only 271 homes last month, fewer than half the 642 units launched in March.

 

The number of homes sold also fell, to 274 in the month, from 322 previously. These figures exclude executive condominiums.

 

'It is clear that homebuyers were in no hurry to make purchases and were taking more time to assess the market,' said Mr Li Hiaw Ho, the executive director of CB Richard Ellis (CBRE) Research.

 

He attributed this trend to the continuing instability of financial markets and increasing concerns over the higher cost of living.

 

Perhaps as a result of the slowdown, prices have begun to show signs of strain.

 

An analysis by property firm Knight Frank found median prices of new homes sold last month had slid 9 per cent to $943 per sq ft (psf), from $1,035 psf in March.

 

One reason for the lower prices could be that most of the homes launched and sold were in cheaper mass-market developments.

 

Eight out of 10 homes sold in the month cost $1,000 psf or less. Only seven homes, or about 2 per cent of the total sold, fetched more than $2,000 psf.

 

This is a major reversal from previous months. As recently as in December, more than 70 per cent of the homes sold for the month cost more than $2,000 psf.

 

The strength of the mass-market segment last month was the bright spot in an otherwise dismal set of figures yesterday.

 

The best-selling project was a suburban development: Stadia in Yio Chu Kang Road, which sold more than 90 per cent of its 56 units within the month.

 

'Latent demand remains strong, especially for the mass-market projects that are reasonably priced between $750 and $850 psf,' said Mr Chua Yang Liang, the head of South-east Asia research at Jones Lang LaSalle.

 

On the other hand, only three units were launched in the prime core central region. Demand for homes in this high-end area and in the mid-tier city-fringes remained fragmented and weak, said Mr Chua.

 

Property consultants said they expect buying activity to remain slow in the coming months as the current gloomy sentiment persists.

 

But some, such as CBRE's Mr Li, expect sales to start improving next month as developers begin stepping up launches.

 

Mr Ku Swee Yong, Savills Singapore's director of business development and marketing, said buyers are starting to return to the market.

 

'I dare say last month's sales numbers will be the lowest we will see this year,' he said.

 

'Showflat crowds are still pretty good, and from now on, we should see launches picking up.'

 

Having some high-profile launches would give the market a boost, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

 

'Essentially, the lukewarm sentiment can be explained primarily by the lack of launches of major developments that might cause excitement.'

[Leepee]

A very confident Mr. Ku.

With more new launches at LOWER prices, maybe the sales number will pick up. He may be right in his statement.

But Price wise may not pick up yet.

 

Reminds me of many confident SE who dare say COE will reach $20k.

 

 

Mr Ku Swee Yong, Savills Singapore's director of business development and marketing, said buyers are starting to return to the market.

'I dare say last month's sales numbers will be the lowest we will see this year,' he said.

'Showflat crowds are still pretty good, and from now on, we should see launches picking up.'

Edited May 16, 2008 by Leepee

[Ahyoo2002]

They must be confident so that many potential buyers will believe them

[Throttle2]

exactly , no. of sales increasing does not mean price is increasing.

 

I dare say that prices are still going down.

[Chongster]

but feb is already lower than Apr, so his statement is immediately wrong. talk is cheap. you guys saw the credit suisse report yet? it's predicting 40% fall. somehow i could never bring myself to believe what ppty agent says.

[Iridrium]

It is true that sentiments are down, but there is a limit on how much the developers can cut their price since they brought their land high and the cost of construction is still going up....

 

It will be quite wishful to think they will be able to sell below costs.

 

Having said that, there are definite good picks in the market from the deferred payment owners whose project is going to TOP soon, from small developers who cannot afford to hold and desperate owners looking to sell....

[Scenic98]

to a certain extend, it's quite true there's still some latent demand. all waiting for those flippers and small time developers to feel the pain. Banks will also be more careful now in lending out money.

while i fully expect property prices to come off from the highs, i do not expect it to come crashing down to the post SARS level.

 

if u track these real estates companies companies over the last few months, they start with very confident to somewhat confident to not so confident now. but they still have to make a living, so cannot han-tump the mkt.

 

Eh, Nicholas Mak, if u are reading this, remember some 25 years ago, after band practice we went to your house in Punggol to watch a certain kind of video . How's life?

[Miles]

my view is similar to yours. not many people can hold on to their property come 2009 when their property TOP. Some speculators bought a few one shot on deferred payment. Good luck to them. They have probably made their keeps... its time to cough back out now.

 

if these people panic sell, they may send the pricing spiralling downwards because URA will record their transaction at that low price, and subsequent valuation will base on those records. And it will be a vicious cycle. the only saving grace is 2010 IR which might draw potentially high visitors here. But if Chinese stock market remain weak then, we may see a double whammy.

 

So, Credit Suisse's report of 40% down on price may not be untrue afterall.

[Wind30]

yup, speculators. There is a lot of risk in property market so if you want to earn you have to take the risk.

 

now it is the time to seat back and watch and hopefully prices fall back to more realistic levels. Property like that one lor, once it rises, everyone want to buy no matter how expensive. Once it starts to fall.... nobody want to buy all want to wait.

[Arowana1]

despite all said and done, the owners are my place are still asking ever higher prices. and u know wat? some did close this week at prices higher than wat ura is showing. then again, mine is mass market so was a laggard compared to the market.

[Puffer_fish]

the one to fear are the guys who bought non prime area at sky high prices and hope to push the prices higher.

 

can any one imagine D8 area asking for 1,100 psf when a D10 unit is asking for 1,600psf

 

 

can still buy from desperate sellers, happy shopping

[Chongster]

(a) there are developers, and there are developers. some are flushed with cash, some have renege on their enbloc deals. many small time ones are struggling to find money. also these are listed cos, and even if you can hold cash, your stocks are going to get battered. with that your credit rating and ability to borrow. it can be a quick downward spiral.

 

(b) no one in this mkt should be buying from developers anyway. why wait 3 years to get your property when you can buy one almost TOP and enjoy rental yield? esp. now when DPS has been scrapped. which is why weak developers are in deep sh*t....

 

© individuals can hold if (a) interest rates continue to be benign (b) they hold on to their jobs © rents continue to be high. take anyone of these out, you will have trouble. (a) is anomalous in this inflation environment, (b) looks ok, but the foreign banks are shedding jobs (and a lot of high paying jobs are these) © is apparently softening.

 

(d) btw on individuals, the people who bought 3 or 4 are all trying to unload one or two. a lot of these players can hold and pay, but it will start eating into their lifestyle.

 

(e) the best people to buy from? wait a while longer and buy from the banks...

[Throttle2]

clearly there is still pent up demand...........

 

prices will not drop 40% across the board.

for some very speculative developments maybe.

 

i will look to buy another when it drops about 20%

 

 

cheers

[Miles]

interest rate has started to strengthened again this week.

i just refinanced (luckily) and my bank told me they have revised int rate by 0.2% points upwards.

[Stary]

which bank did you do your refinancing?

[Chongster]

if everyone thinks like that, sure will drop 20%! agree there's still money in this market, just no mood

 

rentals also coming down, esp. for high end condos.

[Akari_ph]

advise needed? is this a good time to buy 4/5 rooms hdb resale flat with 20k above valuation price.

Edited May 18, 2008 by Akari_ph

[Nkps]

why leh?