June 2011 saw sales in the private home sector fall to a four-month low. Even though June is a traditionally slow month on the private home front, this year’s performance was affected further by waning buying sentiment due to an economic decline and potential oversupply.
(Will the private housing sector finally stabilise?)
Last month, the number of private home units sold slowed 25% to 1,182 units (from 1,575 units in May). In April, the number was 1,805. Including executive condominium units, a total of 1,394 homes were sold in June. June is usually a quieter time for the housing market because of the school holidays.
Despite the fall, experts still consider the market healthy. Yet this year, the HDB flat supply boom, as well as buyers’ growing dissatisfaction with prices, have further affected sales adversely.
Another factor for the change in buying behaviour is the frequent and insightful blog updates from recently appointed Minister for National Development Khaw Boon Wan on housing issues. “Homebuyers are holding back their purchases, confident that the new minister’s leadership would bring home prices to a more affordable level in the near future,” said Dr Chua Yang Liang, head of research at Jones Lang LaSalle Southeast Asia to The Straits Times, adding that the result is “a more moderate demand for two consecutive months”.
Additionally, one market force that could be driving first-time middle-income buyers away from the private homes sector is HDB’s move to build 25,000 new flats for the current year. “Furthermore, with more than 10,000 new private homes expected to enter the market in the second half of this year, consumers may be waiting for more choices in other locations across the island,” observed PropNex Corporate Communications Manager Adam Tan.
Some experts foresee the coming months to serve up more changes to the Government’s housing policies (such as the swift release of new HDB flats), as well as even more economic troubles. Others noted the monthly sales that record between 1,000 and 1,500 units reflect a healthy, moderate buyer interest. They explain the decline in sales may mean demand for homes can finally attain a steady state.
If their comments turn out to be true, Khaw may be relieved to know that his efforts have proved to be fruitful. In a blog post he wrote earlier this month, in response in inaccurately reported figures, the minister explained, “I am working my guts out to try to calm the market, for the good of all Singaporeans.”
Should the market pick up speed again, analysts expect the authorities to implement even more cooling measures, especially in the suburban segments. Suburban segments constituted 70% of June’s total sales, and are expected to continue making up the bulk of new launches for the rest of this year.
Meanwhile, analysts say developers will need to take another look at their pricing strategies, and price their units more reasonably to stay competitive in a market where supply is increasing and buyers are becoming more choosy and cautious. Last month’s top-sellers included Woodhaven, with 155 units sold at a median price of $981 per sq ft (psf), and The Miltonia Residences, with 149 units at $877 psf.
For this month, one market watcher predicted a modest total sale of 1,000 to 1,200 units, while another expected the number to be around 1,400.
What remains to be seen is how a stable private home sector will affect the HDB sector.
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