Press Release

March 15, 2023

New Private Home Sales Climbed In February On Terra Hill Launch And Pick-up In City Home Sales

 15 March 2023, SINGAPORE – The launch of Terra Hill and the sales momentum of city homes have helped to shore up developers’ sales in February 2023. New private home sales (excluding Executive Condos) came in at 432 units, rising by nearly 10% month-on-month from 393 units shifted in January. When compared to February 2022, sales were down by 20.3% from 542 units transacted a year ago. There were only two fresh project launches in February, being the 270-unit Terra Hill in Pasir Panjang and the 24-unit Gems Ville in Geylang.

Source: PropNex Research, URA

The Core Central Region (CCR) was the best-selling sub-market in February, accounting for 51.4% of the monthly sales. Developers sold 222 CCR homes, marking a 39.6% increase from January. CCR projects dominated the Top 10 best-performing projects list (see Table 1), with Pullman Residences Newton being the most popular CCR project, transacting 38 units at a median price of $3,171 psf in February. Meanwhile, Leedon Green sold 21 units at a median price of $2,943 psf and Perfect Ten shifted 20 units at a median price of $3,174 psf.

This is followed by the Rest of Central Region (RCR) which booked a more than three-fold increase in sales, thanks to the launch of freehold development Terra Hill. In February, RCR new home sales came in at 163 units, with Terra Hill accounting for nearly 60% (97 units at a median price of $2,699 psf) of the sub-market’s total. The other top-selling RCR project was Riviere which sold 18 units at a median price of $3,073 psf.

New private home sales in the Outside Central Region (OCR) segment – or mass market – fell by 74.7% from January to February to 47 units, as a dearth of new projects put a drag on transactions. January’s sales were also boosted by the launch of Sceneca Residence, setting a higher base for comparison on a month-on-month basis. The best-selling OCR project in February was The Gazania which moved 12 units at a median price of $2,358 psf.

Meanwhile, the sales of new ECs continued to ease in February as no new projects have been launched in this segment. Developers sold 38 EC units last month, representing a 76% drop from the 159 units transacted in January. The top-seller in the EC segment in February was Tenet which saw 24 units change hands at a median price of $1,399 psf.

In terms of launches, developers placed 401 new units (ex. ECs) for sale in February – down from 410 units that were put on the market in the previous month. No new ECs were launched in February.

 Wong Siew Ying, Head of Research & Content, PropNex Realty:

“The new private home sales volumes in recent months have been relatively moderate owing to a combination of factors, such as the elevated interest rates, firm home prices, and limited unsold stock in the market. Despite these challenges, the major new launches this year have been relatively well-received so far.

Recent launches Terra Hill and Botany at Dairy Farm (launched in March), which sold 38% and 48% of their total units respectively on launch day, indicate that there is still a pool of genuine demand in the market. We think the take-up rates for future project launches are likely to trend along these numbers, given the cautious sentiment. Our sense is that buyers have become more cautious as the high interest rates and the uncertainty on further rate hikes weigh on their buying decision. To this end, the market will also be watching if the recent bank failures in the US will stay the Federal Reserve’s hand on rate hikes this year – slower or lower rate hikes will be positive for home sales.

In addition, with more launches due to be put on the market this year, some buyers may want to take a wait and see approach so as to compare their options before purchasing a property. Perhaps some buyers may be hoping for prices to correct downwards amidst the ampler supply of launches, but we think this is unlikely to be the case, as developers have locked in high land cost for the sites and are facing rising costs as well.

The government introduced higher marginal Buyer’s Stamp Duty (BSD) rates for higher-valued residential from February 15, 2023. The portion of the value of the property in excess of $1.5 million and up to $3 million will be taxed at 5%, while that in excess of $3 million will be taxed at 6%; up from the current rate of 4%. Our view is that the BSD increase is not likely to impact home sales, and it appears to bear out in the sales transactions data after the BSD rates went up. Looking at the URA Realis caveat data, the second half of February had a larger number of homes sold that are valued at $1.5 million and above, compared to transactions from the 1st to 14th February period.

In February, the CCR led developers’ sales, accounting for 51% of the monthly transactions. As home prices in the CCR have been rising at a slower pace compared to that of the RCR and OCR in the past years, many buyers are recognising value in the CCR sub-market. Based on caveat data, the median unit price gap of new private homes between the CCR and RCR has narrowed from 11.9% in January to 9.7% in February (see Table 2). The narrowing price gap between CCR and RCR homes is not lost on buyers and investors who have been seeking value-buys in this sub-market over the last few months. In February, foreign buyers accounted for nearly 16% of CCR’s new home sales, while the corresponding figures for January 2023 and December 2022 were 24% and 31% respectively. Meanwhile, Singaporean buyers made up 66% of CCR new private home sales in February, compared to 56% in the previous month.

Looking ahead, the launch of Botany at Dairy Farm earlier this month will support developers’ sales in March, but we think a more meaningful uptick could materialise in April and May where more new projects – and fairly sizable ones too - will come onstream. These upcoming projects include Tembusu Grand (638 units), The Continuum (816 units), Lentor Hill Residences (598 units), and The Reserve Residences (est. 732 units).”

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