Singapore’s sales of new homes residential sales plummeted 41.7 percent in June compared to July, with the slump in transaction volumes coming just before city authorities boosted the stamp duty on home purchases by as much as 50 percent as part of a barrage of market curbs that some analysts have called excessive.
The total number of private homes sold in June, excluding public housing and EC public-private hybrid units, fell to 654 from 1,122 units in May, according to preliminary statistics released by Singapore’s Urban Redevelopment Authority (URA). The figures represented a 20.2 percent drop from the same month in 2017. During the first six months of the year Singapore developers sold 4,089 private homes — down 20.2 percent from the first half of 2017.
While the government cooling measures appear to have been triggered by home pricing statistics that showed a nine percent increase in the average price of private homes over the past year, the decline in sales volumes shown in the URA figures supports the conclusion of market analysts such as OCBC’s Andy Wong who likened the rise in taxes to using “a sledgehammer to kill a fly.”
Expected Surge in New Projects May Have Made Buyers Hesitate
“We believe the decline in sales last month was due mainly to prospective buyers taking a more circumspect approach to home hunting, possibly eschewing pricier units,” said Tricia Song, Head of Research for Singapore, Colliers International. “With more project launches lined up over the rest of the year, prospective buyers are also spoilt for choice.
In part the drop in deals can be explained by fewer new projects hitting the market in June — with some 31.5 percent fewer new homes being released onto the market than were welcomed in May.
The best selling private home projects in June all debuted during the month with MCL Land’s Margaret Ville selling 121 units at a median price of S$1,873 per square foot, Oxley Holdings’ Affinity at Serangoon moving 107 units at a median price of S$1,584 per square foot and The Garden Residences, jointly developed by Wing Tai Asia and Keppel Land in Serangoon Gardens selling 64 units at a median price of S$1,662 per square foot. For Affiniity at Serangoon and The Garden Residences, Colliers noted that despite the city-leading sales numbers, the projects sold only 10 percent of the units that they made available, possibly because of their asking prices, which were set at over S$1,500 per square foot.
Among previously launched projects, Twin Yew, developed by CSCEC subsidiary CSC Land, also notched 64 deals in the West Coast Vale area at a median price of S$1,350 per square foot.
Over 50 percent of the private homes sold during the month were located in suburban areas of the city, according to the URA statistics.
Market Outlook Turns Sour
With an estimated 1,000 private homes sold on the evening of July 5th by buyers rushing to beat the July 6th imposition of the market curbs, analysts expect July sales to still be strong, but the outlook for the remainder of the year is less encouraging, with full year figures for the category expected to be 15-20 percent lower than 2017.
Colliers predicted that “the fresh property cooling measures announced on July 05 will put a drag on home sales for the rest of the year as the higher ABSD could curtail investment demand from both locals and foreigners, and the larger cash outlay required for down payment on homes weighs on buying interest.”
With prices already up by 7.4 percent in the first six months of the year the agency now expects prices to remain flat for the rest of the year, as developers resist lowering prices on projects already launched.