Mindy Tan | The Business Times | Sunday, Aug 18, 2013

SINGAPORE

Even as sales of private homes plunged last month, on the back of limited launches and the introduction of the Total Debt Servicing Ratio (TDSR), there has been a noticeable shift in interest towards executive condominiums (ECs).

Although no new EC projects were launched last month, 112 ECs were sold, out of the 593 units moved (including ECs). As a proportion of the total number of units sold last month, ECs constituted 18.9 per cent of total sales.

In June, ECs constituted 14.8 per cent of total sales (313 ECs were sold, out of total sales of 2,119 units). This is despite more than 600 ECs being introduced into the market in June.

“This illustrates that the TDSR framework has shifted some home-buying demand, especially among HDB upgraders, to the EC projects,” said SLP International executive director of research and consultancy Nicholas Mak.

It is important to note, however, that there has always been ongoing strong demand for ECs, noted Ong Kah Seng, director at R’ST Research.

That being said, the data can be read as the onset of “possible increasing practicality by homebuyers”, as they recalibrate their mindsets, taking in the impact of the cumulative cooling measures and the effect of the TDSR.

“Buyers are increasingly cautious, favouring cost-effective options in case prices of suburban private homes falls, considering the record high prices (achieved thus far), and risks from rising interest rates,” said Mr Ong.

“Those who are eligible to purchase new ECs may increasingly favour it, and buyers who do not need a very large condominium unit will go for an optimum-sized unit.”

Excluding ECs, developers sold 481 private homes last month, less than a third of the 1,806 units that were moved in June.

The number of homes launched also dropped drastically to 557 homes, from 1,768 units in June.

The plunge was partly attributable to successive rounds of curbs which culminated in the rollout of the TDSR framework which took effect on June 29.

For newly launched projects, the five developments launched last month had a take-up rate of 22.7 per cent compared to 70.6 per cent in June.

The take-up rate of newly launched projects was 68.7 per cent in January, and 57.1 per cent in February, when the effects of the seventh round of property curbs was felt, pointed out SLP’s Mr Mak.

Knight Frank’s head of consultancy and research Alice Tan noted that a total of 63 units were moved at the 463-unit Vue 8 Residence (13.6 per cent) at a median price of $1,004 psf.

The Serenno sold three units (9.1 per cent) at about $1,477 psf; Riverside Melodies sold three units (7.3 per cent) at about $1,328 psf; and The Quinn sold eight units (5.8 per cent) at about $1,530 psf.

Only one out of the 30 units available at Devonshire 8 (3.3 per cent) were sold at a median price of $2,498 psf.

The introduction of the TDSR framework, and its resultant longer processing time, has not only dragged the momentum of closing property transactions, it has also reduced some impulse buying, said Christine Li, head of research at OrangeTee.

“J Gateway sold another 15 units in July. Given that only one out of 738 homes was left unsold in June, it can be deduced that there were 14 returned units in July which were subsequently resold to other buyers. These 14 units were mostly the ones affected by TDSR,” said Ms Li.

“We might see more returned units in J Gateway in August given that some of the loan approvals were still pending as of early August,” she added.

According to MCL Land, buyers for 723 units have exercised their option to purchase. Fourteen units were returned and subsequently resold. The options for 15 units have yet to be exercised.

While sale of mass market homes, or those located in the Outside Central Region (OCR) continued to dominate home sales (excluding ECs), upgraders and mass condominium buyers have curtailed their home investment as OCR homes saw the biggest drop, said Mohamed Ismail, chief executive officer of PropNex Realty.

Some 296 of the units (excluding ECS) sold were located in the OCR versus 140 in the Rest of Central Region (RCR) and 45 in the Core Central Region (CCR).

Month-on-month comparisons show that demand for homes in the OCR dropped by 78.3 per cent, followed by CCR which dropped by 62.2 per cent and RCR which dropped by 57.0 per cent.

Consultants concur that August will likely be a slow month for sales, with between 500 and 1,000 units likely to be moved, as the lunar month effect kicks in.

Said Jones Lang LaSalle Singapore research director Ong Teck Hui: “As seen with previous measures, this slowdown in launches is likely to prove only temporary and sales launches are expected to resume to more moderate levels, especially after the Ghost month . . . new projects could be more realistically priced although sites with strong attributes will still command a price advantage.”

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