Amid the pandemic and economic downturn, developers’ sales continued to outperform expectations in July, booking the highest monthly sales in eight months. Latest data from the Urban Redevelopment Authority (URA) showed that 1,080 new private homes (excluding Executive Condos) were sold in July 2020 – up by 8.2% from the 998 units transacted in the previous month and 8.4% lower than 1,179 units sold in July 2019.
July’s new home sales of 1,080 units were also the highest monthly tally since 1,165 units were shifted in November 2019. In total, 4,942 new private homes were sold in the first seven months of 2020, representing an 8% year-on-year (YOY) decline from 5,367 units transacted in the corresponding period of 2019.
The increase in sales in July was led by the Core Central Region (CCR) and Outside Central Region (OCR) which saw transactions rise by 43.0% and 12.1% month-on-month (MOM), respectively. Meanwhile, new home sales dipped by about 2.6% MOM to 419 units in the Rest of Central Region (RCR) (See Chart 1 below).
Developers launched 869 new units for sale in July, representing a 45.6% increase from the 597 units put on the market in June 2020.
The private new home sales market has wind in its sails right now, driven by underlying housing demand, ample liquidity in the system, low interest rates, and attractively priced projects. With no new major launches in July, the market continued to absorb units from previously launched projects – at a pace which we think is commendable given the substantial economic headwind from the pandemic.
While the relatively brisk sales in recent months may seem at odds with the gloomy economic prognosis, it must be said that the current downturn is not felt evenly across all sectors of the economy. Some sectors – such as financial services and tech - have held up better than others amid the COVID-19 pandemic. As such, there are still segments of the population - those who feel more secure about their job prospects or have built up substantial savings over the years or perhaps have been thinking of upgrading to a condo - may see this as an opportune time to enter the market. After the 2 months of circuit breaker experience in April and May 2020, some potential home buyers feel the need to have the roof over the head and space on their own are getting increasingly more important and urgent. Hence they decide to grab the opportunities offered by developers that have priced the selling price of the property reasonably.
PropNex Research remains cautiously optimistic about the new home sales volume which should find support from the new launches that are still to come. Some upcoming launches include Penrose in Sims Drive; The Landmark in Chin Swee Road; Myra in Potong Pasir; Verdale in Jalan Jurong Kechil; and Ki Residences in Brookvale Drive. However, downside risks persist and there remains a high degree of uncertainty over the pandemic situation and Singapore’s economic outlook. Apart from the pandemic, global geopolitical and trade tensions also bear watching as any intensification could further weigh on the economy.