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Property Herald - Residential Primary Market Sales Pick Up But Faces Headwind in Near Term

Nicholas Mak from MOGUL.sg dives into residential property trends from Q1 2023 and provides an outlook for the year to come.

The Botany at Dairy Farm.

Residential primary market sales


After selling an average of about 412 private housing units monthly in January and February, real estate developers sold 492 private residential units in March, 13.6% more than in February. The key driver of this increase in sales is the launch of the mass-market condo project, The Botany at Dairy Farm.


Developers launched 573 private housing units in March, an increase of 42.9% month-on-month (mom), which contributed to the jump in sales volume last month.


Sales volume in April 2023


Based on the latest data obtained from URA Realis, the number of primary market caveats lodged in the first nine days of April numbered 438 units. About 78% of these 438 units are from Tembusu Grand, which was launched in April 2023. The strong primary market sales in the early part of April also shows that the sales momentum is likely to continue in the coming months, provided developers keep up the steady supply of new project launches.


Tembusu Grand made up the bulk of April's sales.

On the other hand, it also shows that the primary market sales volume is highly dependent on new project launches. If there are no major residential projects launched in a given month, the primary market sales could be quite dismal.

Project Name

​No. of units sold from April 1 to 9*

Tembusu Grand

342

Leedon Green

13

The Botany at Dairy Farm

7

The Gazania

6

The Atelier

6

Irwell Hill Residences

6

*Note: Based on the caveats lodged obtained on 17 April 2023, which are dated 1 to 9 April 2023.


The sales numbers also show that a large proportion of the sales in a given project are very front-loaded, meaning that the majority of the sales in a residential project will be achieved in the first month that it was launched. After which, the sales will drop off quite drastically.


For example, after selling 184 units of The Botany at Dairy Farm in March, the sales at this 386-unit project dropped to only 7 units sold in the first 9 days of April.


First quarter of 2023


The Singapore private residential primary market activities also picked up in the first quarter of this year (1Q 2023). Developers released 1,384 private housing units in 1Q 2023, a jump of 174.6% over the 504 units launched in 4Q 2022. It is also 125.8% higher year-on-year (yoy).


However, the quarterly housing sales grew at a slower pace in 1Q 2023. Although developers sold 1,316 private residential units, 90.7% higher than the last quarter of 2022, the sales in 1Q 2023 is 27.9% lower compared to the corresponding period one year ago.


Another indicator that demand within the private housing market could be slowing down is that the take-up rate for 1Q 2023 stood at 95.1%, which is below parity for the first time since 1Q 2021.


The launch and sales volume in the last quarter of 2022 was adversely affected by the cooling measures that were introduced by the government at the end of September 2022. It appears that the effects of the cooling measures are continuing to affect the property market.


Outlook


About more than 30 residential projects are slated to be launched this year. On average, about 5 projects should be launched every two months. This means that the marketing activities and sales in the residential primary market could potentially be very active this year.


Based on current trends and economic factors, we could see a slowing down in the property market despite more than 30 residential projects launching this year.

However, the Singapore property market will be facing headwinds such as slower economic growth, high interest rates and regulatory crackdown such as the authorities investigating and clamping down on creative methods to evade the parts of the cooling measures, such as the Additional Buyer’s Stamp Duty (ABSD). The results could be lower housing demand.


In 2022, developers sold 7,099 private housing units (excluding Executive Condo), 36.7% lower than the 10-year average sales of 11,216 units from 2012 to 2021. Despite the strong supply of new residential projects in the pipeline, the primary market sales this year is projected to fall below the 10-year average of 11,216 units again due to the challenges faced by the market.


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