SINGAPORE: Sales of new private homes rose 75 per cent last month despite the circuit breaker period, a surprise to many analysts who expected the property market to remain muted after the sharp plunge in April.
Data released by the Urban Redevelopment Authority (URA) on Monday (Jun 15) showed that developers sold 486 units - excluding executive condominiums (EC) - last month, compared with 277 units in April.
Including ECs, 509 units were sold in May, which is a 73.7 per cent increase from April.
On a year-on-year basis, developers’ sales, excluding ECs, declined 48.9 per cent from the 952 units transacted in May 2019.
"The month-on-month increase was surprising due to the full month of expected inactivity due to the circuit breaker," said Ms Tricia Song, head of research for Singapore at Colliers International.
"We believe more buyers took the plunge as some developers have dangled discounts for 'star buys' and attracted interest, in particular those prospective buyers who already were contemplating a purchase before the circuit breaker," she added.
SALES DRIVEN BY SUBURBAN CONDOS; NO PHYSICAL VIEWINGS
In total, developers released 615 private homes in May, down 3.9 per cent from April and 55.9 per cent from May last year. There were no new project launches, and most of the new units released were from developments in the Outside Central Region (OCR).
Sales were also driven by demand for suburban projects, which made up more than half of the new private homes sold in May.
In May, 256 units were sold in the Outside Central Region (OCR), followed by 189 homes in the Rest of Central Region (RCR) and 41 units in the Core Central Region (CCR).
The most popular development was Treasure at Tampines with 56 units sold, followed by Parc Clematis at Jalan Lempeng and The Florence Residences in Hougang with 55 and 54 units sold, respectively.
The interest in suburban projects reflect "Singaporeans' latent high housing aspirations amid (the) pandemic," said property analyst Mr Ong Kah Seng, adding that virtual property viewings will remain as "the new normal" for developers looking to stay ahead.
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Singapore implemented a circuit breaker period on Apr 7 to contain the spread of COVID-19, allowing only essential services such as healthcare, transport, logistics and food and beverage to continue operations.
During that period, showroom viewings - a core marketing activity for property development - were halted and potential buyers had to view the units virtually.
Singapore entered into Phase 1 of its reopening on Jun 2, but have yet to allow showroom viewings to resume.
The property market, however, has been able to see some "electrifying deals" because of Singapore's low-interest rate environment and "safer haven" status, said some analysts.
"Despite the fact that sale galleries remain closed under the “circuit breaker” period, there was no tripping of the residential new sales figures," said Mr Desmond Sim, head of research for Southeast Asia at CBRE.
"Anecdotal evidence have also pointed to some developer discounts and incentives which may have helped to give buyers the final push, particularly for those who have been waiting on the sidelines.
"The lowered interest rate environment was also a much needed jolt. Uncertainties and fluctuation in the equities and bond markets may have also motivated some buyers to look back into residential properties, which have long been regarded as a safer haven," he added.
ANALYSTS DIVIDED ABOUT THE FUTURE
As Singapore makes plans to move into Phase 2 of its reopening, analysts are divided on how the property market will fare in the next few months.
"With the rising phenomena of virtual sales galleries, we are seeing buyers and investors adjusting and adapting to the new normal and digital modes of property marketing and sales," said PropNex Realty CEO Ismail Gafoor.
"It appears that the worst may be over as Singapore continues to work at containing the virus and is exploring a phased approach to re-opening the economy," he said.
Ms Wong Siew Ying, head of research and content at PropNex, added that the rebound in May's sales signals "optimism for June".
"Developers can tap a a larger-than-usual buyer pool for their existing launches, with the resumption of the school term this month and travel restrictions keeping families in the country," said Ms Wong.
But Ms Christine Sun, head of research and consultancy at OrangeTee said that while "the unexpected sizzling sales came as a welcome relief", it is still too early to celebrate.
"We should observe the market a while more to ascertain if the market is indeed on the road to recovery," said Ms Sun.
Some investors may have bought properties in May out of "fear of losing a good deal", she said.
"They could be expecting prices to recover since the coronavirus outbreak is abating in some countries and many major economies are reopening gradually," said Ms Sun.