New private home sales jump 80% in April; cooling measures unlikely to impact local buyers: Analysts

SINGAPORE: Sales of new private homes in Singapore jumped 80 per cent in April to a seven-month high, driven by the launch of two high-profile projects - Blossoms by the Park near one-north and Tembusu Grand in the Katong area.

Excluding executive condominiums (ECs), developers sold 887 units in April, up from 492 units sold in March. 

On a year-on-year basis, sales rose by 34 per cent, according to data published by the Urban Redevelopment Authority (URA) on Monday (May 15).

A total of 779 units were launched for sale, 36 per cent more than in March and 96 per cent higher compared with a year ago.

The strong April sales figures show that the recent property cooling measures have a minimal impact on Singaporean buyers, said analysts. 

According to data from OrangeTee & Tie, Singaporeans made up about 84 per cent of buyers of Blossoms by the Park, which was launched shortly after the new cooling measures kicked in on Apr 27. 

Meanwhile, 90 per cent of Tembusu Grand buyers are Singaporeans. The project was launched earlier in April. 

"The stellar sales at Blossoms by the Park were a surprise, as almost 75 per cent of the project was sold within its launch month despite the new cooling measures," said Ms Christine Sun, OrangeTee & Tie's senior vice president of research and analytics. 

"The cooling measures may not stop local buyers, especially first-timers unaffected by the increased ABSD," she added.

"Some buyers expect prices to rise further since more buyers may enter the market when interest rates moderate and most Singaporeans are gainfully employed. Moreover, home prices have continued to rise even after each round of ABSD adjustments, based on historical trends."

Agreeing, ERA's key executive officer Eugene Lim said Singapore's private residential market is mainly supported by domestic demand, adding that foreign demand "rarely influences the dynamics of the overall market".

Huttons Asia's senior director for research Lee Sze Teck noted, for instance, that only eight foreigners bought units at Blossoms by the Park.

He added that The Continuum, a freehold project launched in the first weekend of May, also sold more than 200 units on launch day. 

"The cooling measures will lead to fewer purchases by foreigners but the impact on overall transaction volume is expected to be minimal. Almost 95 per cent of buyers are either Singaporeans or permanent residents," Mr Lee said.

FOREIGN DEMAND

Singapore imposed new property curbs on Apr 27, doubling the additional buyer's stamp duty (ABSD) to 60 per cent for foreigners buying any residential property. 

Singaporeans buying their second residential property will pay an ABSD rate of 20 per cent, up from 17 per cent, while those buying their third and subsequent residential property will have to pay an increased rate of 30 per cent, up from 25 per cent. 

The rate of 30 per cent also applies to permanent residents buying their second residential property. PRs buying their third and subsequent residential property will pay an ABSD of 35 per cent, up from 30 per cent.

The increased ABSD appears to have had an impact on foreign buyers, said PropNex’s head of research and content Wong Siew Ying.

"Feedback from our luxury home sales team indicates that while the number of viewings among foreigners generally remains steady, such investors are less forthcoming about buying right now, particularly for big-ticket homes, following the latest ABSD hike," she said.

"It is still early days yet, but we think the ABSD rate hike appears to be taking effect in crimping foreign investment demand."

However, because of Singapore's stable governance and strong currency, some Chinese buyers "may still bite the bullet" to invest in property here, said ERA's Mr Lim. 

Mr Lam Chern Woon, Edmund Tie's head of research and consulting, expects the share of foreign purchases to moderate in 2023.

"Nonetheless, we expect to see sustained demand from the Americans who are exempted from paying the ABSD on the first residential property purchase in Singapore due to the free-trade agreement," he added.

"With a slowdown in foreign demand, the overall pie for homebuying is expected to shrink in 2023, and developers may push back some of the launches to the second half of this year, especially those located in the prime areas."

Editor's note: An earlier version of this article wrongly attributed a quote to Ms Tricia Song from CBRE. We are sorry for the error.