Developers' Sales Fell In August Due To Muted Market Sentiment And Buyer Fatigue Amidst A Flurry Of Launches

15 September 2023, Singapore – Private new home sales (ex. executive condos) fell sharply from July to August owing to the muted market sentiment and as buyer fatigue set in amidst a flurry of new launches in recent months. Developers sold 394 new homes (ex. EC) in total in August – down by about 72% from a near 2-year high of 1,412 units transacted in July. On a year-on-year basis, sales were down by 10% from the 438 units shifted in August 2022.

There were five fresh launches in August, including an EC project Altura in Bukit Batok, which was very well-received. The other four private residential projects that were put on the market comprised Orchard Sophia, TMW Maxwell, The Lakegarden Residences, and The Arden which collectively sold 133 units during the month – accounting for about 34% of August’s monthly sales. This takes the total number of new private homes sold in the first eight months of 2023 to 5,189 units (ex. EC) – on track to reaching PropNex’s new home sales forecast of 7,000 to 7,500 units for 2023.

New home sales in August were led by the Outside Central Region (OCR) which saw 192 new homes (ex. EC) change hands (see Table 3) – down by 61% from 488 units in the previous month where The Myst and Lentor Hills Residences had spurred July’s sales. The top three best-selling projects in August were all in the OCR: The Lakegarden Residences which sold 73 units at a median price of $2,101 psf; Lentor Hills Residences which moved 46 units at a median price of $2,090 psf; and The Arden which transacted 30 units at a median price of $1,777 psf.

Developers sold 106 new private homes in the Rest of Central Region (RCR), representing a steep decline of about 87% from the high base of 836 units shifted in July, mainly supported by Grand Dunman and Pinetree Hill then. The top-selling RCR projects in August included Grand Dunman which sold 26 units at a median price of $2,558 psf, One Pearl Bank which moved 21 units at a median price of $2,851 psf, and Liv @ MB which sold 12 units at a median price of $2,437 psf. TMW Maxwell which was launched during the month sold 6 units at a median price of $3,338 psf.

Meanwhile, new private home sales in the Core Central Region (CCR) rose by about 9% from 88 units in July to 96 units in August. The most popular CCR project in August was new launch project Orchard Sophia which sold 24 units at a median price of $2,808 psf. The other CCR project that made the top 10 list was One Bernam where 13 units changed hands at a median price of $2,630 psf. This is one of the better monthly sales for One Bernam since the project was launched in May 2021. The launch of nearby TMW Maxwell in the RCR at a much higher price-point could have reinvigorated interest for One Bernam.

In the EC segment, sales surged by more than four times to 255 units in August from 59 units in the previous month, driven mainly by the launch of Altura EC in Bukit Batok. Altura transacted the bulk of the monthly EC sales, moving 225 units at a median price of $1,480 psf. Based on URA’s monthly home sales data, there are only about 420 unsold new ECs on the market as at the end of August, mainly from North Gaia in Yishun and Altura.

Developers placed a total of 590 new units (ex. ECs) for sale in August - mostly from the four new projects as well as One Bernam – marking a sharp decline from the 2,156 units launched in the previous month. Meanwhile, 360 new EC units were launched in August at Altura.

Please attribute the comments below to Wong Siew Ying, Head of Research & Content, PropNex Realty.
“The stellar sales in July was always going to be a tough act to follow in August, which coincided with the start of the Hungry Ghost month – a period where market activity tends to slow due to fewer launches. On top of that, there are other factors which have combined to create a more complex and uncertain environment for home sales. They include signs of moderation in the housing market, where prices are seen to be peaking after three rounds of property cooling measures from December 2021.

Meanwhile, buyers could also be experiencing some fatigue following a spate of new launches in the last few months, which presented them with a wider variety of choices that require more time to evaluate before entering into a purchase. In addition, with interest rates still high and the Singapore economic growth forecast being narrowed to 0.5% to 1.5% for 2023, we think the market sentiment has shifted somewhat, with buyers becoming more cautious and increasingly selective.

Buyers’ discernment and inclination to compare between projects can probably be seen in the pick-up in sales at Liv @ MB in July and August, as well as at One Bernam in
August. We think the slew of new projects in District 15, including Grand Dunman could have rekindled interest for Liv @ MB, while TMW Maxwell could have channelled attention to One Bernam. According to caveats lodged, Liv @ MB sold 13 units in July and 12 units in August – the only months to post double-digit sales since 224 units were sold when the project was launched in May 2022. Meanwhile, One Berman’s 13 transactions in August were the highest in 6 months, and among the better monthly sales since the project hit the market in May 2021.

With the recent launches and the ample unsold stock, many buyers seem to be in no hurry to enter the market – preferring to take more time to compare projects and observe the price trends, especially since previous launches had set benchmark pricing in various locales. As a few more new projects come on in the rest of the year, we should expect buyers to return to some of the previously-launched projects to pick up properties should they perceive those units as offering more value and/or meeting most of their key priorities. According to the PropNex Home Buyers’ Sentiment Survey 2023, the top 5 most important attributes that homebuyers seek are proximity to transport nodes, reasonably-priced units, right amount of space, as well as proximity to primary schools and the workplace – in that order.

Based on the URA Realis caveat data, the median transacted unit price of non-landed new private homes dipped by 1.7% MOM to $2,852 psf in August (see Table 1), as limited new project launches and the additional buyer’s stamp duty (ABSD) hike from end-April likely cap further price growth upside. The median unit price also slipped in the OCR, falling slightly by 0.8% MOM to $2,068 psf in August, partly due to the lower prices transacted at The Arden, where its developer likely had more flexibility in pricing the units given that it has purchased the site at a lower land rate in 2019. The RCR bucked the trend as its median price rose by 4.4% MOM to $2,613 psf in August – likely on the influence of firm prices at projects such as TMW Maxwell, Grand Dunman, One Pearl Bank, Pinetree Hill, and The Continuum.

With the punitive ABSD measure in place, the proportion of new non-landed private home sales (ex. EC) to foreigners (non-PR) remained relatively low in August, at 3.1% of the total monthly sales (see Table 2) – which came up to just 12 transactions in absolute terms, based on caveats lodged. Meanwhile, about 17% of the non-landed new private home sales were by Singapore PRs and about 80% by Singaporean buyers.

In the EC segment, this housing type continues to be popular among buyers, including first-timer home buyers and HDB upgraders. The Tenet in Tampines sold its final unit in August and the unsold new EC supply are now found mostly at North Gaia and Altura. Given that the next new EC project may only come on in 2024, we expect North Gaia and Altura to continue to pare down their unsold inventory over the coming months. With EC projects doing well, we can expect developers to remain active in government land sales tenders for such sites. As the Plantation Close EC site fetched a record land rate of $703 psf ppr, we anticipate that the selling price of upcoming ECs to remain firm, and this could potentially help to move sales at existing EC launches.

As the Hungry Ghost month straddles August and September, we project this month’s sales could remain muted given the lack of fresh launches and foot-dragging on buyers’ part amid more plentiful selection of new homes on the market. However, transactions should pick up in October and November with some new projects potentially hitting the market. While exact launch dates have yet to be firmed up, some projects that buyers could look forward to include Hillock Green in Lentor Central, and J’Den, a redevelopment project from the former JCube in Jurong East.”