By ERA Real Estate, The Commentary
Published 17 January 2023Download PDF Article
Developer's Sales of New Homes In December 2022
Introduction
Property Price Trend
Based on the latest figures released by the URA, the Singapore residential primary property market sales contracted in December 2022 as real estate developers sold 170 new private homes, including Executive Condominiums (EC).
This is the lowest monthly sales volume in the primary residential property market since January 2009 when developers sold 108 private homes in that month. In 2008, the property market was rocked by the Global financial crisis, which caused investment sentiments to fall off a cliff. It resulted in a sharp pull back in property market sales in 2008 and early 2009.
The number of private homes sold in December 2022 represented a 34.6% month-on-month (mom) and 73.8% year-on-year (yoy) decline.
Source: URA, ERA Research & Consultancy
The Key Reasons
The lackluster new private housing sales were mainly attributed to a combination of a few factors.
Firstly, many market decision makers such as buyers, sellers and brokers used the year-end school holiday period to go on “revenge vacations” after not being able to enjoy long overseas vacations with their families during the pandemic in the past three years.
Secondly, there was a lack of new private housing launches in December. Developers only released 45 new private housing units last month, the lowest monthly residential launch volume since URA started releasing such data.
Thirdly, many homebuyers are aware that there will be more residential project launches in 2023. Hence, they are “keeping their powder dry” or saving their financial reserves to buy housing units in the upcoming launches.
Executive Condominium Primary Market
The Executive Condominium (EC) primary market fared better than the private housing market last month. Developers sold an estimated 468 EC units in December 2022, about 2.5 times more than 186 units sold in November 2022. The increase in EC sales was mainly due to the launch of a new 618-unit EC project called Tenet, which is located at Tampines.
Primary Market In 4Q 2022
In 4Q 2022, property developers sold an estimated 744 private residential property units (excluding EC) based on preliminary figures. This is the lowest quarterly sales volume since 4Q 2008 , when 418 private homes were sold by developers in that quarter.
The private housing primary market sales in 4Q 2022 was only about one-third the sales volume in the third quarter of 2022. Developers sold 2,187 new private homes in 3Q 2022.
Source: URA, ERA Research & Consultancy
By contrast, the EC primary market performed better with about 1,152 units sold in the last quarter of 2022, which is about 41 times more than the 28 units sold in 3Q 2022. The launch of 2 major EC projects made all the difference. The 6399-unit Copen Grand was launched in October 2022 and the 618-unit Tenet was launched two months later.
As a result, a total of 1,257 EC units were launched in the last quarter of 2022, which is the highest number of EC units launched since 2Q 2016.
This also demonstrated that demand and supply in the EC primary market is very lumpy as the sales volume is influenced by the launches of each EC project, which usually consist of a few hundred housing units.
Residential Primary Market In 2022
On a yearly basis, property developers’ sales dropped by 45.1% in 2022, compared to 2021. An estimated 7,153 private housing units were transacted in the primary market in 2022. This is the lowest annual sales volume since the global financial crisis in 2008, when developers sold 4,264 private housing units in that year.
The low sales volume in 2022 was contributed by the low number of units released for sale. Developers launchedd 4,528 units in 2022 which was 56.9% lower than 2021 launch volume.
The number of private homes launched in 2022 was also the lowest annual launch volume since such data was available 27 years ago. Many of the new residential projects were scheduled to be launched in 2023.
Source: URA, ERA Research & Consultancy
Based on the flash estimate figures, private residential property price index increased by 0.2% quarter-on-quarter (qoq) in 4Q 2022. This represents a slower pace of growth in private property prices in the final quarter of 2022. Prices of private non-landed residential properties in the CCR and RCR have also rose 0.5% and 2.6% qoq in 4Q 2022 respectively. However, prices for private non-landed properties in OCR declined by 2.6% qoq in the last quarter of 2022.
The cooling measures effective from 30 September 2022 would have contributed to more cautious sentiments and moderated some demand for private properties, leading to a more moderate overall price growth in 4Q 2022. The decline in OCR non-landed properties prices in 4Q 2022 could also be potentially attributed to the cooling measures announced in September 2022 with more stringent borrowing requirements. Aside from which, rising interest rates may have also affected buyer sentiments. The combination of these factors had an adverse affect on the mass-market condominium prices in the final quarter of 2022.
As a result, a total of 1,257 EC units were launched in the last quarter of 2022, which is the highest number of EC units launched since 2Q 2016.
This also demonstrated that demand and supply in the EC primary market is very lumpy as the sales volume is influenced by the launches of each EC project, which usually consist of a few hundred housing units.
Residential Primary Market In 2022
On a yearly basis, property developers’ sales dropped by 45.1% in 2022, compared to 2021. An estimated 7,153 private housing units were transacted in the primary market in 2022. This is the lowest annual sales volume since the global financial crisis in 2008, when developers sold 4,264 private housing units in that year.
The low sales volume in 2022 was contributed by the low number of units released for sale. Developers launchedd 4,528 units in 2022 which was 56.9% lower than 2021 launch volume.
The number of private homes launched in 2022 was also the lowest annual launch volume since such data was available 27 years ago. Many of the new residential projects were scheduled to be launched in 2023.
Outlook
Despite the expected economic headwinds in 2023, there is a good chance developers will sell more private housing units this year than in 2022. A key reason is that about 30 to 40 residential projects between 10,000 and 12,000 units are lined up to be launched this year.
The sales performance of these new residential launches will depend on macro factors such as the economic climate, job market and interest rates as well as micro factors such as the pricing of individual residential projects. However, the injection of new housing supply is necessary to increase the sale activity in the property market.
The new launches and the accompanying marketing activities would draw more buyers back to the property market. Therefore in a favourable climate, developers would sell more than 8,500 housing units this year, which would bring the property sales volume to the pre-pandemic level.
Introduction
Property Price Trend
Based on the latest figures released by the URA, the Singapore residential primary property market sales contracted in December 2022 as real estate developers sold 170 new private homes, including Executive Condominiums (EC).
This is the lowest monthly sales volume in the primary residential property market since January 2009 when developers sold 108 private homes in that month. In 2008, the property market was rocked by the Global financial crisis, which caused investment sentiments to fall off a cliff. It resulted in a sharp pull back in property market sales in 2008 and early 2009.
The number of private homes sold in December 2022 represented a 34.6% month-on-month (mom) and 73.8% year-on-year (yoy) decline.
The Key Reasons
The lackluster new private housing sales were mainly attributed to a combination of a few factors.
Firstly, many market decision makers such as buyers, sellers and brokers used the year-end school holiday period to go on “revenge vacations” after not being able to enjoy long overseas vacations with their families during the pandemic in the past three years.
Secondly, there was a lack of new private housing launches in December. Developers only released 45 new private housing units last month, the lowest monthly residential launch volume since URA started releasing such data.
Thirdly, many homebuyers are aware that there will be more residential project launches in 2023. Hence, they are “keeping their powder dry” or saving their financial reserves to buy housing units in the upcoming launches.
Executive Condominium Primary Market
The Executive Condominium (EC) primary market fared better than the private housing market last month. Developers sold an estimated 468 EC units in December 2022, about 2.5 times more than 186 units sold in November 2022. The increase in EC sales was mainly due to the launch of a new 618-unit EC project called Tenet, which is located at Tampines.
Primary Market In 4Q 2022
In 4Q 2022, property developers sold an estimated 744 private residential property units (excluding EC) based on preliminary figures. This is the lowest quarterly sales volume since 4Q 2008 , when 418 private homes were sold by developers in that quarter.
The private housing primary market sales in 4Q 2022 was only about one-third the sales volume in the third quarter of 2022. Developers sold 2,187 new private homes in 3Q 2022.
By contrast, the EC primary market performed better with about 1,152 units sold in the last quarter of 2022, which is about 41 times more than the 28 units sold in 3Q 2022. The launch of 2 major EC projects made all the difference. The 6399-unit Copen Grand was launched in October 2022 and the 618-unit Tenet was launched two months later.
As a result, a total of 1,257 EC units were launched in the last quarter of 2022, which is the highest number of EC units launched since 2Q 2016.
This also demonstrated that demand and supply in the EC primary market is very lumpy as the sales volume is influenced by the launches of each EC project, which usually consist of a few hundred housing units.
Residential Primary Market In 2022
On a yearly basis, property developers’ sales dropped by 45.1% in 2022, compared to 2021. An estimated 7,153 private housing units were transacted in the primary market in 2022. This is the lowest annual sales volume since the global financial crisis in 2008, when developers sold 4,264 private housing units in that year.
The low sales volume in 2022 was contributed by the low number of units released for sale. Developers launchedd 4,528 units in 2022 which was 56.9% lower than 2021 launch volume.
The number of private homes launched in 2022 was also the lowest annual launch volume since such data was available 27 years ago. Many of the new residential projects were scheduled to be launched in 2023.
Based on the flash estimate figures, private residential property price index increased by 0.2% quarter-on-quarter (qoq) in 4Q 2022. This represents a slower pace of growth in private property prices in the final quarter of 2022. Prices of private non-landed residential properties in the CCR and RCR have also rose 0.5% and 2.6% qoq in 4Q 2022 respectively. However, prices for private non-landed properties in OCR declined by 2.6% qoq in the last quarter of 2022.
The cooling measures effective from 30 September 2022 would have contributed to more cautious sentiments and moderated some demand for private properties, leading to a more moderate overall price growth in 4Q 2022. The decline in OCR non-landed properties prices in 4Q 2022 could also be potentially attributed to the cooling measures announced in September 2022 with more stringent borrowing requirements. Aside from which, rising interest rates may have also affected buyer sentiments. The combination of these factors had an adverse affect on the mass-market condominium prices in the final quarter of 2022.
As a result, a total of 1,257 EC units were launched in the last quarter of 2022, which is the highest number of EC units launched since 2Q 2016.
This also demonstrated that demand and supply in the EC primary market is very lumpy as the sales volume is influenced by the launches of each EC project, which usually consist of a few hundred housing units.
Residential Primary Market In 2022
On a yearly basis, property developers’ sales dropped by 45.1% in 2022, compared to 2021. An estimated 7,153 private housing units were transacted in the primary market in 2022. This is the lowest annual sales volume since the global financial crisis in 2008, when developers sold 4,264 private housing units in that year.
The low sales volume in 2022 was contributed by the low number of units released for sale. Developers launchedd 4,528 units in 2022 which was 56.9% lower than 2021 launch volume.
The number of private homes launched in 2022 was also the lowest annual launch volume since such data was available 27 years ago. Many of the new residential projects were scheduled to be launched in 2023.
Outlook
Despite the expected economic headwinds in 2023, there is a good chance developers will sell more private housing units this year than in 2022. A key reason is that about 30 to 40 residential projects between 10,000 and 12,000 units are lined up to be launched this year.
The sales performance of these new residential launches will depend on macro factors such as the economic climate, job market and interest rates as well as micro factors such as the pricing of individual residential projects. However, the injection of new housing supply is necessary to increase the sale activity in the property market.
The new launches and the accompanying marketing activities would draw more buyers back to the property market. Therefore in a favourable climate, developers would sell more than 8,500 housing units this year, which would bring the property sales volume to the pre-pandemic level.
Written By ERA Research & Consultancy
ERA Singapore
T: (65) 6249 3172
W: rnc@era.com.sg
Disclaimer as attached in PDF for download.