SINGAPORE: Sales of new private homes more than doubled in June after showflats reopened following an almost two-month long COVID-19 “circuit breaker” period, in what analysts said indicate firm underlying demand for affordable properties.
Developers sold 998 units - excluding executive condominiums (EC) - in June, an increase of 105 per cent compared with the 487 units sold in May, according to data from the Urban Redevelopment Authority (URA) on Wednesday (Jul 15). Compared with the 821 units transacted in June 2019, last month's sales were 21.6 per cent higher.
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 developers - were halted and potential buyers had to view the units virtually.
READ: Property firms expect more transactions as physical viewings, showflats resume in Phase 2 reopening
HIGHEST SALES FIGURE FOR JUNE SINCE 2013
June’s transactions represent the highest monthly sales since November 2019, when 1,165 new private homes were sold. It is also the highest figure for the month of June since 2013's 1,806 units, analysts said.
"The easing of circuit breaker measures and reopening of showflats from Jun 19 was a major contributor to new home sales surging," said Mr Ong Teck Hui, senior director of research and Consultancy at JLL.
"(That) seem to have unleashed pent-up demand by buyers, suggesting that the private home market remains fairly resilient in spite of the COVID-19 outbreak and the recession," he added.
Including ECs, developers sold 1,031 units in June, up 102 per cent from May.
A "BUYER'S MARKET"
Singapore entered the first phase of its post-circuit breaker reopening on Jun 2, and is currently in Phase 2, which started on Jun 19.
With this, consumers are aware it is a “buyer’s market”, said Mr Ismail Gafoor, CEO of PropNex.
“As the economy reopens, we are seeing buyers coming back to take up units – cognisant of the fact that it is a buyer’s market and that units are more attractively priced.
“Amid concerns about the economic downturn and jobs, there are still genuine buyers out there - with ample liquidity - who are taking advantage of the low interest rates to purchase well-priced units.”
READ: Singapore in technical recession after GDP shrinks 41.2% in Q2 from preceding quarter due to COVID-19
In total, developers released 597 units in June – down 2.9 per cent from the 615 units launched in May and 10.9 per cent from the 670 units in June last year. There were no new ECs launched in June.
Sales were largely driven by mass market homes in the Outside Central Region (OCR), where developers sold 489 units. This was followed by 430 homes in the Rest of Central Region (RCR) and 79 units in the Core Central Region (CCR).
“Projects such as Treasure At Tampines, Parc Clematis, and The Florence Residences continued to move units at a steady clip, owing to their sensitive pricing,” said Mr Gafoor.
“These three projects accounted for over 28 per cent of the total sales in June and were among the top 10 best-selling private residential projects last month,” he added.
Mr Leonard Tay, head of research at Knight Frank Singapore, said June's transactions indicate the resilience of Singapore's property market.
“The modest overall price decrease as well as the encouraging demand volume seen in June, all point to an underlying resilience in the private residential market that could motivate developers to launch new projects in the remaining half of 2020,” he said.
"To maintain the momentum registered in June, developers might also provide sweeteners in the form of selective discounts to ride on the current nascent rebound," he added.
Ms Christine Sun, head of research and consultancy at OrangeTee, said that while the jump in June's sales figures was broad-based across all market segments, she noticed a substantial increase in the number of foreign buyers and pricier homes being sold.
"The number of private homes excluding ECs transacting at S$2 million and above rose from 23 units in May to 129 units in June," she said.
She added that 49 non-landed private homes were bought by non-permanent residents in June, up from the 14 units transacted in May and seven units in April.
“Many foreigners bought properties last month as the growing macro-economic uncertainties have driven more overseas investors to seek shelter for safe-haven assets here,” said Ms Sun, citing their trust in Singapore's legal system and the quality and investment potential of properties.
“We may expect more foreigners to pick up private homes in the coming months as the interest rates are expected to remain low and ample liquidity is flowing into the asset markets due to the massive quantitative easing programmes launched around the world," she added.
Property analyst Ong Kah Seng added that with the General Election now over, Singapore could potentially see more wealthy buyers willing to pay a "special price premium" for properties they favour.
"Wealthy foreigners have always appreciated political stability in Singapore, comparative with theirs back in their country," he said.
2020 COULD STILL SEE OVERALL LOWER SALES
Despite the recent uptrend, transactions this year could still end lower than in 2019, said Knight Frank's Mr Tay.
Singapore reported on Tuesday that its economy contracted 41.2 per cent in the second quarter from the previous three months, taking it into a technical recession.
Mr Tay expects new private home sales to range between 6,000 and 7,000, down 28 per cent to 38 per cent from the 9,734 units transacted last year.