New private home sales take a hit after mortgage curbs

Home sales by developers slowed significantly as they held back launches and took stock of curbs on home loan tenures which took effect on Oct 6.

Statistics compiled by the Urban Redevelopment Authority based on developers' sales data show that 1,948 private homes excluding executive condos (ECs) were sold in the primary market in October, down 25.7 per cent from September.

However, no alarm bells have been set off, with many market watchers noting that last month's sales still exceeded the 1,633 units which developers launched in the same period, continuing a trend seen since June. The October launch figure was down 26.6 per cent from September.

Knight Frank chairman Tan Tiong Cheng says: "The general direction in terms of home buying volume in the primary market still seems to be up. Month to month, there may be some cooling off. There's bound to be some reaction when government introduces more sets of measures. People sit back, reflect and hold back their buying decision for a while.

"If there's no price drop, they'll find a way around the measures, for example, buying property in their children's names to get around the lower loan-to-value limit for those with an existing home loan and to save on the 3 per cent additional buyer's stamp duty."

The latter is payable by Singaporeans who own two existing residential properties and buy their third or subsequent property.

Last month's 1,948-unit sales was up 39.9 per cent from October 2011.

In the first 10 months of this year, developers have sold 19,792 private homes. Colliers International director Chia Siew Chuin predicts the pace of sales will slow from the year-to-date average monthly sales volume of 1,979 units to around 1,300-1,500 units each for November and December. She cites the school holiday and festive season along with a more cautious mood among those affected by the tightened mortgage rules.

Still, the full-year tally will touch a fresh high, forecast at around 22,000 to 24,000 units by property agents. The previous record, in 2010, was 16,292 units. Last year, the figure was 15,904 units.

Jones Lang LaSalle national director Ong Teck Hui said that of the 1,633 private homes developers launched last month, only 659 were in fresh projects. The majority 974 units were newly released units from earlier projects. "This reflects caution among developers amid uncertainty following the MAS measures."

Last month, developers sold 676 ECs - a public-private housing hybrid with - 4.5 times September's sale volume of 150 units.

SLP International executive director Nicholas Mak suggests some demand for private homes especially in suburban locations last month was channelled to ECs. Developers released 777 new ECs in October, after there were no launches in the previous three months. In all, developers sold 3,493 ECs in the first 10 months - surpassing the 2,883 units for the whole of last year and 1,052 in 2010.

Including ECs, developers moved 2,624 private homes last month, down 5.3 per cent from September's 2,771 units, but up 59.7 per cent year on year.

October's top-selling project was Heron Bay, an EC project on Upper Serangoon, with 354 units sold at a median price of $738 per square foot (psf), followed by the Skies Miltonia condo in Yishun (309 units sold at $1,034 psf median price).

The highest psf achieved by a developer last month was a unit at Sage in Nassim Road which fetched $4,289 psf.

Outside Central Region, home to mass-market projects, made up 76 per cent of the 1,948 private homes excluding ECs sold last month.

Despite some caution setting into the market over potential oversupply setting in over the next few years, developers continue to chase private housing sites at state tenders amid the low interest rate environment. Likewise, investors are expected to continue snapping up properties at new launches.

Knight Frank's Mr Tan says: "Those aged 40 and above, owning at least one property and with savings, will have capacity for another investment property. If you give them an alternative safe investment - such as inflation-linked government bonds with say three-year tenure and coupon of about 3-3.5 per cent per annum - it will soak up a big chunk of liquidity in the market going into property."