New home sales to stay sluggish in 2016

By Tay Hock Meng

/ The Edge Property |

January 19, 2016 10:00 AM SGT

This year saw 18 residential projects launched, of which 11 were private condominiums and seven were executive condos (ECs). Four of the projects had more than 1,000 units, namely High Park Residences (1,390), Sims Urban Oasis (1,024), Kingsford Waterbay (1,165) and Sol Acres (1,327).

High Park Residences was considered the biggest private condo to be launched since the 1,715-unit D’Leedon hit the market in December 2010. Yet, it sold 1,100 units in one weekend as selling prices were below $1,000 psf. High Park Residences is 93% sold to date, making it the best-selling project of 2015 (see Table 2).

The total number of private residential units launched for sale this year was 7,292 units, according to JLL Research. This is slightly below last year’s 7,693 units. However, the number of EC units launched this year (4,370) was close to double the 2,505 units released in 2014. The proportion of ECs relative to private condos was 60% in 2015, the highest in five years since the government relaunched EC sites for sale.

Chua Yang Liang, JLL head of research for South East Asia, expects the proportion of EC units launched relative to private residential to remain in the 35% to 45% range. While the proportion of EC units launched may be higher, the pool of buyers has also widened as the government raised the monthly household income ceiling in August, from $12,000 to $14,000, he adds.

Table 1

Source: JLL Research

Table 2

EC oversupply? Based on the EC land parcels already sold, there is an estimated one year’s supply of EC units that have been launched and are unsold, says Nicholas Mak, executive director of research and consultancy at SLP International. In the pipeline are another six EC projects with about 3,170 units yet to be launched.

“The EC units from these six projects are enough to meet EC buyers’ demand for one year,” says Mak. However, the government continues to offer EC development sites for sale on the Confirmed List under the Government Land Sales (GLS) programme in 1H2016. “One possible reason is to prevent EC prices from rising,” he adds.

Similar to the 2H2015 GLS programme, there was only one EC site offered for sale under the 1H2016 programme. The site is located on Anchorvale Lane in Sengkang. The first EC project to be launched next year is likely to be Sim Lian Group’s Wandervale in Choa Chu Kang, say property agents. Next in line is Parc Life, the EC project in Sembawang by Frasers Centrepoint and Keong Hong, which could be rolled out sometime in March or April.

Kicking off the New Year in the private sector is The Wisteria, a mixed-use development with 216 residential units at Yishun Avenue 4 by BBR Holdings. It is in the pipeline for launch in 1Q2016. Another private condo project that could potentially be launched sometime towards end-1Q2016 is the much-anticipated project in Toa Payoh by a consortium made up of Evia Real Estate, Maxdin and Gamuda Bhd.

‘Lacklustre sales’ JLL’s Chua expects new home sales next year to be “lacklustre” as the Singapore property market is likely to be affected by the challenging global economy and the interest rate hike. “The government’s cooling measures are not expected to be removed anytime soon,” he adds. “Thus, the market is likely to remain sluggish till end-2016.”

Prices of new launches in the suburbs or Outside Central Region near MRT stations are forecast to remain range bound at $1,250 to $1,350 psf, according to Chua. Developments in the city fringe or Rest of Central Region that are nearer to the CBD could fetch $1,450 to $1,550 psf on average.

The EC market is expected to face further headwinds as newly launched projects hit saturation point as sales progress. Seven EC projects were launched in 2015, with the latest being The Criterion in Yishun. As at November, the EC projects launched in 2015 saw take-up rates ranging from 10% to 48%, according to URA data (see Table 2).

“At average selling prices of around $800 psf, EC buyers are less enthusiastic and less willing to commit than before, when market conditions were more positive,” says Chua. “We expect prices of ECs launched next year to be maintained in the $750 to $800 psf range, depending on location.”

Click here to find out more about new projects in Singapore.

This article appeared in the City & Country of Issue 709 (Dec 28, 2016) of The Edge Singapore.

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