New private home sales (excluding ECs) look to be taking a respite as May saw a plunge of over 31% M-on-M to 1,702 units transacted.
“The private housing market seemingly took a breather last month due to the anticipation of more new launches in the road ahead, which caused buyers to hold back their home purchase decisions”, states PropNex CEO Mr Mohamed Ismail, “May was also not a bumper month in terms of new launches, thus resulting in the drop of new private property sale.”
“If there is no fresh supply, then most likely the demand will be absent as well”, surmises CEO Mr Mohd Ismail.
In contrast, the EC scene bucked the trend, with sales ballooning to 355 units—mainly due to the launch of 1 Canberra, as compared to 173 units in April (or a 51% jump), bringing the total tally of new private home sales (including ECs) to 2,057 for the month, albeit translating to a 22.6% lower M-on-M.
“In May, almost 90% of all units transacted were in the mass market—or below $1,500psf; this shows the rising popularity and demand from first time homebuyers and HDB upgraders, which has been the trend ever since the introduction of the ABSD in December 2011,” states CEO Mr Mohd Ismail.
Flo Residence sold 266 units at a median price of $863psf, 1 Canberra moved 209 units at $711, and Seahill sold 200 units at $1,383psf, while Eight Riversuites found buyers for 192 units at $1,340psf. He concedes that these four projects were instrumental in the robust sales figure of May, accounting for 867 units, or over 50% of all the units sold.
“There are 39 new sale sites expected in the second half of the year—which can potentially yield more than 14,000 new private homes, first time homebuyers or HDB upgraders will have an increased array of choices, and therefore can afford to be more selective,” continues CEO Mr Mohd Ismail, “this is coupled with the fact that the private property market has shown some price consolidation (he cites the 0.1% dip in private property prices in 1Q12), which has enabled buyers to take their time before committing to a purchase decision.”
“These days, it is common for new launches to not be able to sell more than 50% of their units in the initial launch phase—which is unlike the past where there usually is a ‘rush’ to grab new units,” continues CEO Mr Mohd Ismail, “this is because buyers are more cautious and price sensitive than before, but however, projects that are priced reasonably will still continue to enjoy high take-up rates.”
“With potential new launches coming up, sale of new mass market homes in the OCR and RCR will continue to remain healthy. In June and the months to come, we expect new private residential properties sales figures to be between the range of 2,000 to 2,200 units per month with ECs continuing to do well. Developers of low to mid-tier projects will continue to be looking to launch new projects, borrowing confidence from the months of continued red-hot demand for private residential properties.”
The anticipated increase in private property housing supply is also not likely to cause a major dip in prices as “there is a continued demand from HDB upgraders and long term investors, coupled with mortgage interest rates are that are at a record low level. These factors will help to sustain the market in the coming quarters,” states CEO Mr Mohd Ismail.
“Barring any deterioration in the external environment and further policy risks, the strong demand driven by an abundant oncoming supply of private residential homes is likely to drive overall take-up for new private residential homes in 2012 to beyond 20,000 units,” concludes CEO Mr Mohd Ismail.
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