Singapore developers' private home sales fell by about a third (34.3 per cent) between April and May 2017.
Amid the absence of major launches last month, 1,024 units were sold, down from 1,558 in April.
This marks the second consecutive decline in the month-on-month numbers; developers had moved 1,780 units in March.
But property consultants are upbeat, noting that sales of more than 1,000 units last month, coming overwhelmingly from previously launched projects, is a reflection of strong home buying sentiment.
In fact, primary market demand for units in previously launched projects has remained above 1,000 units for three consecutive months - at 1,079 units in March, 1,004 units in April and 1,008 units in May.
Moreover, the 5,544 private homes that developers sold in the first five months of this year is 71.8 per cent higher than the 3,227 units transacted in the same period last year. Some consultants expect full-year sales volumes to surpass initial expectations.
Sentiment on the ground is improving. A lot of people are looking for residential properties after waiting for years because of the cooling measures. So there has been some pent-up demand.
Agents report that the March reduction in the holding period for the seller's stamp duty (SSD) on residential property - from four years previously to three years - has encouraged investors to come off the sidelines and buy a unit at recently launched projects.
As ERA Realty Network's key executive officer Eugene Lim, said: "Buyers will have the flexibility to resell...when the project is completed, without having to pay SSD. This allows them to take profit should the opportunity present itself."
While the additional buyer's stamp duty (ABSD) remains intact, people have come to accept it as part of the cost of buying residential property. As one investor says, he takes ABSD as the COE - or certificate of entitlement payable for car purchases - when buying property.
The view that private home prices will bottom out this year is also gaining traction in the market.
Those who were sitting on the fence are probably locking in purchases in anticipation of prices appreciating due to a few factors - including bullish residential land prices that developers have been paying of late, which may stoke the view that end-unit property prices are poised to rise in the near future.
If the government further relaxes the cooling measures, many are of the view that developers will edge prices up higher.
Some analysts now predict developer sales to come in at 11,000 to 12,500 units - so long as demand for previously launched projects remains robust, even if there are fewer fresh launches in the second half of this year than in the first half.
For each of the past three years, developers have been selling 7,000-plus units.
The only new launch last month was Watercove, a cluster housing project along Wak Hassan Drive in Sembawang. Its developer, Bukit Sembawang, launched 20 of the project's 80 units last month, of which 16 were sold at a median price of S$744 per square foot of strata area.
May's top-selling private housing project was Parc Riviera in West Coast Vale, with 83 units sold at a median price of S$1,246 psf), followed by the The Santorini in Tampines (64 units at a median price of S$1,022 psf), Commonwealth Towers next to Queenstown MRT Station (53 units at S$1,841 psf median price), Kingsford Waterbay along Upper Serangoon View (51 units at S$1,162 psf median price) and Sims Urban Oasis (51 units at a median price of S$1,387 psf).
The 1,024 private homes that developers sold in May was down 3.2 per cent year on year.
URA's data also showed that 370 executive condominium (EC) units - a private-public housing hybrid - were sold in the primary market in May, one unit fewer than in April, but higher than the 334 EC units developers sold in May last year.
Last month's top-selling EC project was Sol Acres in Choa Chu Kang Grove, with 116 units sold at S$794 psf median price.
In the first five months of 2017, developers sold 1,813 EC units - 10.1 per cent higher than the same year-ago period.
Consumers continue to pick up properties that are nearing their completion (Temporary Occupation Date). This is evident in the results of the five best-performing projects in May, which have continued to sell well in the first five months of 2017.
Property agents expect primary-market private housing sales to ease again this month from May, as developers continue taking a breather in terms of new launches amid the current school holiday season.
However, preparations are under way for a string of launches starting next month; Hundred Palms Residences, an EC project in Yio Chu Kang Road; GuocoLand's Martin Modern condo in Martin Place; and Qingjian Realty's Le Quest in Bukit Batok West Avenue 6 are among the projects expected to be launched in July.
Sales volume should rebound in July as developers rush to launch projects and buyers rush to pick up units ahead of the Hungry Ghost Month, which falls between Aug 22 and Sept 19, typically considered an inauspicious period by the Chinese for making large financial commitments.
However, not all projects are selling like hot cakes.
Moreover, the rental market continues to remain soft.
While sentiment has improved in the primary market, in the resale market, some buyers are making very low-ball offers, reflecting their sense of uncertainty - volatility in the global economy, UK situation, etc.
A higher proportion of buyers in the resale market are owner occupiers - compared with the developer sales' market. So there may be a two-tier market emerging: Those buying for immediate owner occupation and who have to pay up the full purchase price pretty soon may still be cautious, especially with rising interest rates affecting their ability to service mortgages, versus those buying a unit in a new project under construction as an investment. The second group of buyers make progress payments on their purchase to the developer and are eyeing prospects of reselling their unit for a profit as the project nears completion.
Adapted from: The Business Times, 16 June 2017