Developers sold 834 new homes in the month of July, a 70.9% surge from the previous month. The strong sales last month was driven by the launch of AMO Residence in the Outside Central Region (OCR), which sold 366 units out of a total of 372 units or 98.4% of the project last month at a median price of $2,110 psf, according to URA data.
However, new home sales in July 2022 was 47.9% lower on a y-o-y basis. Tricia Song, head of research for CBRE Southeast Asia, attributes the y-o-y decline to the fact that July 2021 saw the launch of another major suburban project, namely the 487-unit Pasir Ris 8, where 415 units were snapped up on the first day of launch at an average price of $1,580 psf.
AMO Residence contributed to 75.46% of the 485 units sold in the OCR last month. It was the key reason monthly new home sales shot up 70.9% in July, notes Lee Sze Teck, senior director (research) at Huttons Asia. “The market is hungry for more launches,” Lee comments.
Prior to AMO Residence, the last new launch of a mid-sized private condo with above 350 units in the OCR was the 448-unit Watergardens at Canberra in August 2021, according to Christine Sun, OrangeTee & Tie senior vice president of research and analytics.
More homes sold above $2 million in the OCR
July saw developers launch 402 new units (relative to 834 units sold), a continuation of the trend since February 2021, when the number of units sold surpassed the number of units launched. “With take-up continuously exceeding units launched since February 2021, it also implies that developers’ inventory is depleting with unsold stock declining further,” says Catherine He, director and head of research, Singapore, Colliers International.
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Last month saw the emergence of another new trend: the rise in the number of homes in the OCR sold for at least $2 million. Sales at such prices accounted for 40.6% of transactions in the OCR in July 2022, compared to a low of 9.9% in August 2021, according to Huttons Research. “With $2,000 psf emerging as the average price for mass-market homes, the proportion of such homes is expected to rise,” says Lee.
Even as the number of $2-million homes in the OCR increased, the average size of these new homes shrank by about 15.6% to 1,222 sq ft in July 2022, from 1,447 sq ft in January 2021. Conversely, average price psf of these units increased 30.8% to $2,066 psf from $1,579 psf over the same timeframe, notes Huttons.
While AMO Residence was top of the leaderboard in terms of sales last month, others that ranked among the five best-selling projects were Hyll on Holland, Riviere, Ki Residences at Brookvale and Perfect Ten (See Table of Top 10 Best-Selling Projects in July).
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Best-selling projects in the month of July
Projects in the OCR accounted for 485 or 58.2% of new home sales in July, followed by those in the Core Central Region (CCR) at 185 units (22.2%), and Rest of Central Region (RCR) with 164 units sold (19.7%), according to OrangeTee & Tie.
The best-selling projects in the CCR projects in July were Hyll On Holland which sold 28 units at a median price of $2,638 psf; the Perfect Ten which moved 17 units at a median price of $2,932 psf; and Leedon Green where 16 units were transacted at a median price of $2,749 psf, notes Wong Siew Ying, PropNex head of research and content.
Hyll on Holland saw 28 units sold at a median price of $2,638 psf in the month of July
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In July, Perfect Ten sold 17 units at a median price of $2,932 psf, with the 230-unit project 30% taken up to date
Riviere sold 27 units at a median price of $2,907 psf in the month of July
In the RCR, the most popular project in July was Riviere which sold 27 units at a median price of $2,907 psf. This is followed by Forett At Bukit Timah where 15 units changed hands at a median price of $2,230 psf, adds PropNex’s Wong.
Based on URA Realis caveat data, the median transacted unit price of new private homes in the OCR rose by nearly 19% to $2,088 psf from June to July, likely boosted by sales at AMO Residence, notes PropNex. The median prices of new private homes sold in the CCR and RCR were relatively stable at $2,741 psf and $2,323 psf respectively in July (see Table 2), dipping slightly from the previous month.
Singaporean buyers accounted for 85% of new private home sales (excluding executive condos) in July, partly driven by sales at AMO Residence, says Wong of PropNex. “The caveat data showed that 336 units at AMO Residence were purchased by Singaporeans, while Singapore permanent residents and foreigners took up 24 and six units respectively,” she adds.
Last month saw 17 non-landed home transactions above $5 million, and one unit sold above $10 million. The priciest new home sold last month was for a 3,972 sq ft, five-bedroom unit on the 46th floor of the 48-storey tower of CanningHill Piers. It fetched $17.38 million ($4,376 psf), according to OrangeTee.
Outlook in 2H2022
“AMO Residence’s strong sales should support sentiment in the property market for the rest of the year,” says CBRE’s Song. “This bodes well for the upcoming launches of GuocoLand’s Lentor Modern (605 units) at Lentor Central and Frasers Property’s Sky Eden @ Bedok (158 units) at Bedok Central, which could see interest from upgraders and first-time home buyers who are largely unaffected by the recent round of cooling measures,” she adds.
With 834 units sold in July, the tally for the first seven months stands at an estimated 5,056 units, which is 37.3% below the 8,061 units sold during the same period in 2021, observes Ong Teck Hui, JLL senior director of research & consultancy. Based on current trends, new private home sales could register between 8,000 and 9,000 units for the full year, down 30.9% to 38.6% from the 13,027 units sold in 2021, JLL projects.
In 2Q2022, URA private residential property price index registered a 3.5% q-o-a increase, following a marginal 0.7% increase in 1Q2022. Private home prices increased 4.2% in 1H2022, following 2021’s full-year increase of 10.6%, notes CBRE Research.
CBRE Research’s Song expects price growth to moderate in 2H2022 in the face of rising interest rates and macroeconomic headwinds, which should crimp affordability, especially for over-leveraged buyers. “Barring a severe global economic downturn, CBRE Research expects private home prices to increase by 5% for the full year of 2022,” she says.
Impact of rising interest rates
Despite the expected rise in interest rates, “many homebuyers still made a beeline for the latest project launches”, remarks Nicholas Mak, head of research & consultancy at ERA Realty Network. “Many of the buyers have a medium- to long-term investment horizon and may not be too perturbed by the prospects of higher mortgage rate. This is because they may be expecting monetary policy to be loosened when inflation is tamed or when the economy starts showing signs of slowdown.”
Indeed, the interest rate hike did not seem to have a significant impact on buying sentiment at new project launches, OrangeTee & Tie’s Sun concedes. “Home buyers may not feel the increase in monthly instalments due to the progressive payment schedule for new launch private properties, and home loans tend to be smaller in the initial repayment period,” she comments.
However, borrowers may experience a more substantial increase when a project obtains TOP (temporary occupation permit) three to four years later, reckons Sun. “The borrowing climate may have changed by then and homeowners may refinance their packages or lease out their units to offset the higher monthly mortgages,” she notes.
Increase in household net worth
With 10 rounds of property cooling measures over more than a decade, including the total debt servicing ratio (TDSR) introduced at the end of June 2013, and tightened in December 2021, “the current pace of sales is indicative of the type of demand that has resulted from an increase in household net worth”, says Leonard Tay, Knight Frank Singapore head of research.
According to Tay, the overall household net worth of Singapore residents grew by 74.3% to almost $2.4 trillion in 2021 from about $1.4 trillion in 2012, signalling the increased purchasing power for private homes over the past decade.
While the inflationary environment and lacklustre financial markets are likely to push home buyers to consider and seek out property as an effective hedge against inflation, tighter financing conditions are likely to cap the strength of home sales, points out Lam Chern Woon, head of research & consulting, Edmund Tie.
“The continual sombre economic data points and forecasts are likely to help rein in unfettered demand,” comments Lam. “We expect overall pricing growth to soften slightly for the rest of this year — about 8% for the full year compared with 10.6% last year. The primary market is still expected to clock about 10,000 units of home sales.”
