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SINGAPORE: Sales of private homes hit a new high in July, surging about 52 per cent from June and surprising most analysts. Some 2,767 units were sold compared to just over 1,825 in June.
Market watchers said an element of speculation could be involved although a significant portion of the sales was backed by real demand.
10,017 private homes have been sold in the first seven months of the year. Most analysts expect full-year sales to exceed the record 14,811 sold in 2007. Estimates vary from 14,000 to as much as 18,000 homes for this year.
Donald Han, managing director, Cushman & Wakefield, said: "This time around we hit beyond 10k at this time of the year, we got another five more months to go. Potentially it'll cross the 15,000 mark. It might go as high to 16,000 to 18,000. It will definitely be one of the new records being set."
Analysts said low interest rates, relatively lower prices and the fear of missing the bottom, are some reasons for the strong sales. Buyers are also generally more optimistic about the outlook for Singapore's economy.
However, despite the strong demand analysts said prices are unlikely to go up significantly.
Donald Han, managing director, Cushman & Wakefield, said: "Prices may have hit the top of the earlier expectations mainly because prices moved up ahead of what we projected in the second half this year. To be fair, rentals are still on a decline. So you can't expect too much of a mismatch in terms of price increase and a continuing slowdown in rental.
"So we expect prices to probably hold on to the current levels. Probably if anything, it's going to inch up another two, three per cent. And that's about it before we see the start of next year and then it all depends on market indicators, global economy."
In 2007, prices went up by almost 40 per cent within the year. But analysts said that the difference now is that demand is being driven by owner-occupiers, or longer-term investors.
Grace Ng, deputy managing director, Agency & Business Svcs, Colliers Intl, said: "A majority are owner-occupiers or people buying for long-term investment. But we do see a certain element of speculation. However, we feel it's not excessive because these people who're buying now have the capacity to hold on for mid- or long-term gains.
"As compared to before, now under the Interest Absorption Scheme (IAS), they have to get a loan from the bank, which means they have the capacity to hold on."
When the Deferred Payment Scheme was available, buyers did not have to get loan approvals immediately.
As expected, the mass-market segment was the star performer, with 3.5 times as many sales as in June, at 1,502.
The mid- to higher-end segment of the market saw some improvement too, with about 1.6 times as many units sold for above S$2,000 per square foot in July, compared to June.
But the luxury home sales remained stagnant, with no units priced above S$3,500 per square foot being sold.
Going forward, analysts said July's sales numbers will be unmatched in August, due to the Hungry Ghost Month, which is a traditionally slow period for sales. Less than 1,400 units are expected to be sold then. - CNA/vm
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