Why the Singapore developer home sales tumble in August isn’t as bad as it looks

Mural of construction gear in Singapore's Little India neighborhood.Mural of construction gear in Singapore's Little India neighborhood.

Singapore’s developer home sales plunged more than 64 percent on-month in August, official data show, but analysts said the post-cooling-measure tumble wasn’t a harbinger of ill tidings for the property sector.

Developers sold 616 units in August, excluding hybrid category executive condos, dropping from July’s 16-month high of 1,724, according to data from the Urban Redevelopment Authority, or URA, released on Monday. August’s sales were also down 50.6 percent from the 1,246 units sold in the year-earlier month, the data show.

That was a month after the government surprised the market by introducing a fresh round of property cooling measures.

“This figure is not too bad,” Tricia Song, head of research for Singapore at real-estate services firm Colliers International, said in a note on Monday.

She noted that in July 2013, sales plunged 73.3 percent month-on-month to 482 units after the government introduced an eighth round of property cooling measures, which had including the total debt servicing ratio (TDSR).

“Besides the wait-and-see stance post the measures, developers have also avoided launching new projects during the Hungry Ghost festival, which ran from 11 August to 9 September this year, where some buyers may prefer to hold back purchases,” Song added.

Ong Teck Hui, national director of research and consultancy at real-estate services company JLL, also attributed part of August’s sales drop to a spike in sales on 5 July as developers pushed Stirling Residences, Park Colonial and Riverfront Residences onto the market to capture last-minute sales before the government’s new cooling measures took effect on 6 July.

“July sales volume was therefore an aberration and not reflective of the market,” Ong said in a note on Monday. “In August, we are seeing the private home market settling into its new rhythm although the lunar seventh month could have had some dampening effect as well.”

Ong noted that developer launches and sales have continued, albeit both at a slower pace.

“This is likely to be the trend for the remaining months of the year,” Ong said. “Looking at those projects that are selling better than others, they are perceived as more reasonably priced and that makes them more competitive in a market that has become price-sensitive.”

With an estimated 6,287 new private home sales in the first six months of the year, Ong forecast full-year sales would come in around 8,500 to 9,500 units.

Song also expected home sales to remain slow, forecasting an average of around 600 to 700 units a month for the rest of the year, with both buyers and developers taking a “wait-and-see” attitude. She forecast 2018 sales would come in around 8,500 to 9,000 units, excluding executive condos, which would be around 15 percent to 20 percent lower on-year.

She noted that some upcoming projects could delay their launches until next year, depending on market conditions.

Get the Shenton Wire morning briefing in your inbox