New private home sales down 58% in December on the back of cooling measures
Sales for the whole of 2021, however, hit an eight-year high.
SINGAPORE: Sales of new private homes in Singapore fell 58 per cent in December 2021 compared to the previous month, on the back of fresh cooling measures as well as the seasonal year-end lull.
Excluding executive condominiums (ECs), developers sold 650 units last month, down from 1,547 in November, according to data released by the Urban Redevelopment Authority (URA) on Monday (Jan 17).
Including the 69 EC units sold in December, sales dropped by 55.4 per cent.
Year on year, bookings were down 46.6 per cent. However, total sales in 2021 reached an eight-year high.
Developers launched just 383 units last month - none of them in the Outside Central Region (OCR). A total of 109 were launched in the Core Central Region (CCR) and 274 were in the Rest of Central Region (RCR).
This is a drop of 70 per cent from the 1,283 units launched in November.
Of the 650 units sold in December, 44.9 per cent were in the RCR, 34.5 per cent in the OCR and 20.6 per cent in the CCR.
Among the most popular projects were Mori (RCR), Normanton Park (RCR), Dairy Farm Residences (OCR), Leedon Green (CCR) and the Florence Residences (OCR), said Edmund Tie’s head of research and consulting Lam Chern Woon.
COOLING MEASURES, YEAR-END LULL
Analysts said the decline in sales can be partly attributed to a package of measures introduced by the Government in December to cool the private residential and Housing Board (HDB) resale markets.
The measures included raising Additional Buyer’s Stamp Duty (ABSD) rates, tightening the Total Debt Servicing Ratio (TDSR) threshold and lowering the Loan-to-Value (LTV) limit for loans from HDB.
“The market caught a chill after the Government imposed cooling measures on Dec 16, 2021,” said Huttons Asia senior director for research Lee Sze Teck.
“The year-end festivities, preparation for a new school term and overseas holidays via the vaccinated travel lanes played a role in the lower overall sales.”
OrangeTee & Tie's senior vice president of research and analytics at OrangeTee & Tie Christine Sun had a similar sentiment.
"New home sales declined on the back of a double whammy of fresh property cooling measures that took effect on Dec 16 and the year-end holiday season when sales activities typically slow down," said senior vice president of research and analytics at OrangeTee & Tie Christine Sun.
She noted, however, that the full impact of the new cooling measures is yet to be seen, as a number of deals were closed before the property curbs kicked in.
"Moreover, the 137-unit Mori at Guillemard Road was launched before the cooling measures which may have driven sales higher. Therefore, January’s sales figure may provide a clearer picture of the full impact of the property curbs," she added.
While sales were down in December, the fact that the decline was not as steep as the drop in the number of units launched showed that there was still “underlying buying demand in the property market”, said the head of ERA’s research and consultancy department Nicholas Mak.
Sales of new homes, excluding ECs, were up by 31.4 per cent in 2021 compared to 2020, with 13,118 such properties sold, Ms Sun noted.
“This is the best performance in eight years,” she said.
Going forward, volumes and prices are expected to "show tentativeness" in the first quarter before demand rises again, said Mr Leonard Tay, head of research at Knight Frank Singapore.
"A lack of inventory will continue to underpin demand with 17,140 unsold units in the market as of Q3 2021, down from about 24,300 at the end of 2020," he added.
Huttons' Mr Lee noted that sales may also remain subdued due to the Chinese New Year lull period.
“At the same time, decision-makers will be weighing the implications of the latest property market curbs," he added.
ERA key executive officer Eugene Lim said that demand this year will largely be driven by buyers who are not affected by the ABSD regime.
“These would be the first-time buyers or those that have sold off or are going to sell off their existing residential properties in order to buy another,” he said.
“Developers are well aware that in 2022, it will become a genuine home-buyers market; and they will be working hard to pursue this group with attractive product design and realistic pricing.”
Ms Sun estimated that about 8,000 to 9,000 new homes will be sold in 2022, while Mr Mak gave a slightly higher prediction.
“If the market were to recover in the second half of 2022, developers could still sell about 9,000 to 10,000 private housing units this year,” he said.