Despite the surprise cooling measures announced on 13 January, the month still saw a healthy 1,534 number of private residential transactions, down just 9.7% from last month’s 1,699 units.
Y-on-Y though, this figure represents a 4% upward shift from January 2010’s 1,476 units, and a whopping1,334% from the 107 units in January 2009 when the market was finding its footing in a recession.
Strong Demand Against Preference For Lower Prices
“The number of transactions indicate very clearly that there is still a strong demand for private property,” observes PropNex CEO Mr Mohamed Ismail. “However, there is a slight downward shift in the preference with regards to price, evidenced by the fact that 680 of the units, or 44.3%, fall within the $1,000–$1,999psf range. This is down from December 2010’s 51.5%.”
However, he attributes this shift partly to the 345 Executive Condominiums that were sold at below $1,000psf, which accounted for 22.5% of the total, rather than falling prices.
“While mass market projects in the Outside Central Region traditionally fell below the $1,000psf mark, rising prices have broken this threshold,” he explains, noting that in the robust recovery of mid-2010, developers were launching mass market projects with prices above the $1,000psf mark. Today, such mass market projects include Space @ Kovan and Vacanza @ East, with median price tags of $1,193psf and $1,097psf respectively.
“The other reason for the still-healthy percentage of units transacting in the $1,000–$1,999psf range is the increase in the number of shoebox or ‘mickey mouse’ apartments,” he reveals, referring to those apartments that are smaller than 500ft2 in size. He adds that around 1,500 such units were sold in 2010, up from only 883 in 2009 and fewer than 500 for both 2007 and 2008.
Although the quantum price for such apartments are low due to their small size, and thus adds to their attractiveness to buyers, Mr Ismail says that the price per square foot is then much higher than a larger unit within the same project.
“In fact,” he opines, “we can see an increasing trend now that the ceiling for mass market prices will exceed the $1,000psf mark with more the greater number of smaller units being built by developers.”
However, he continues, the fact that 46.2% of all private units sold were in the <$1,000psf price range is still a telling sign that the private residential market remained affordable in January, allowing for more sustainable growth than 2H10, where over 50% of all projects sold every month were above $1,000psf.
This more sustainable ratio of <$1,000psf against $1,000–$1,999psf projects was also evident in the top selling projects: The Prive’s 217 units and Canberra Residences’ 155 units (372 units total) accounted for 54.6% of the top four selling projects. On the other hand, Spottiswoode 18’s 204 units and The Tennery’s 105 units (309 units total) accounted for 45.4%. Altogether, these four projects garnered 44.4% of all units transacted.
Healthy Forecast Notwithstanding More Cooling Measures
In spite of the cooling measures announced on 13 January 2011, the sales volume for February 2011 is expected to be close to 1,000 units, based on the fact that around 500 sales have been recorded in the first half of the month.
“Although,” says Mr Ismail, “this is rather unexpected as, in addition to the unexpected announcement of the cooling measures, February is a short month and also incorporates the usually quiet Lunar New Year period.”
However, he notes that private home sales remained robust over this year’s festive period, which will show up in healthy sales for the whole of February.
He expects March 2011 to see well in excess of 1,000 units sold as developers launch their projects after the Chinese New Year period.
With regards to the most recent cooling measures, Mr Ismail says that their full impact would only be seen clearly after 1Q11. In fact, he says that what might further soften the market is the uncertainty over whether there will be further cooling measures implemented by the Government, referring to Minister for National Development Mr Mah Bow Tan’s statement in Parliament on 14 February 2011 that the Government “will take further steps, if necessary, to promote a stable and sustainable property market.”
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Adam Tan (Corporate Communications Manager) 9006 8726