The Hillford
Although sales of new private residential units continued to increase in March, analysts are highlighting that buyers are becoming more cautious ahead of a wave of new launches amidst economic uncertainty. Despite being up for the third consecutive month, new home sales in March were 43.8% below the five-year average for the same month, with Tricia Song, CBRE's Head of Research for Southeast Asia, noting that 876 units were sold.
Song stated that "compared to the early part of 2022, take-up has largely moderated and buying sentiment has turned cautious amid record high interest rates and a slowing economy." In terms of Q1 2023 sales volume, 1,318 units were sold, which is nearly 30% lower than the 1,880 units sold during the same period last year.
Leonard Tay, the Head of Research at Knight Frank Singapore, suggests that homebuyers who are price-sensitive, especially those in the mass market segment, may become cautious due to prevailing inflation, high interest rates, and an uncertain economic environment. On the other hand, luxury homebuyers who are less reliant on debt financing are likely to continue supporting demand for high-end properties.
Tay predicts that prices in the prime segment will probably increase since core central region (CCR) prices have not risen as rapidly as other areas, while price growth in the mass market may start to slow outside of new launches at benchmarks. He believes that this could result in a possible two-tier market emerging in the coming months.
According to the Urban Redevelopment Authority (URA), developers sold 492 units, excluding executive condominiums (ECs), in March, a 13.6% increase from the 433 units sold in February.
In March of this year, the number of units sold decreased by 24.8% compared to the 654 units sold in March 2022. The majority of transactions in March were from the outside central region (OCR), which accounted for 230 units, or 46.7% of the total units sold (excluding ECs), with most of the sales coming from The Botany at Dairy Farm launch. Meanwhile, 40% of the March sales, or 197 units, came from the prime CCR, and the remaining 13.2%, or 65 units, were in the rest of central region (RCR).
When including ECs, there were a total of 513 units sold in March, an increase from the 471 units sold in February, but a decrease from the 702 units sold in March 2022. In terms of launches, there were 573 units introduced to the market in March, up 42.9% from the 401 units launched in February.
The Botany at Dairy Farm, located in the OCR, was the top-selling project of the month, with 184 out of its 386 units sold at a median price of S$2,068 per square foot (psf). Market watchers attribute its success to its lower pricing compared to other new suburban projects.
Following The Botany, the next two best-performing projects were Leedon Green in the CCR, selling 26 units at a median price of S$2,957 psf, and The Landmark in the RCR, selling 24 units at a median price of S$2,626 psf.
According to senior research directors at Huttons Asia, Lee Sze Teck, almost half of the new sales in March accounted for transactions of S$2 million or more, indicating the high liquidity in the market. CBRE's Song noted that close to 30% of the new sales volume were in the S$1.5 million to S$2 million range, while 25.4% of deals were in the S$1 million to S$1.5 million bracket.
Singaporean buyers made up the bulk of the monthly sales, accounting for 77.3% of the total, while Singapore permanent residents bought 14.5% of the units. Foreign buyers purchased 7.8% of the total units sold in March, with almost three-quarters of them being CCR sales, according to Huttons' Lee.
According to Knight Frank's Tay, the proportion of foreign buyers of non-landed homes in the CCR rose slightly from 15.5% in Q4 2022 to 15.7% in Q1 2023, based on data as of April 12, excluding ECs. In March, 18 new non-landed homes were sold for at least S$5 million, with the most expensive being a 2,056 square foot freehold unit at Klimt Cairnhill, sold for S$7.6 million or S$3,697 psf. However, there were no transactions above S$10 million.
Upcoming launches such as Blossoms by the Park, The Continuum, and Lentor Hills Residences are expected to support sales in the coming months, according to analysts. Huttons' Lee also noted that Tembusu Grand, which launched earlier in April, sold 340 units or 53% of the project at an average of S$2,465 psf.
According to Lam Chern Woon, head of research and consulting at Edmund Tie, March saw a noticeable firming up of new home prices. Compared to February, seven of the top 10 projects, such as Leedon Green, The Landmark, and Pullman Residences Newton, had higher median sales prices in March.
Lam noted that "These seven projects saw prices rising by 2.6% month-on-month on average in March. As unsold inventory gets pared down, developers are emboldened to raise pricing in accordance with sustained market demand."
Chief Research Officer of Mogul.sg, Nicholas Mak, observed that new projects were heavily front-loaded, with most sales concluded within the first month of launch. Afterward, sales tend to decline sharply.
Analysts predict that new home sales will range between 7,500 to 10,000 units this year, with price growth forecasts varying from 3 to 8 per cent. CBRE's Song stated that 7,099 new homes were sold in 2022, representing the lowest figure in 14 years, since 2008's 4,264 units.