Singapore Private Home Sales to Slide After July Surge as Supply Dwindles

Developer sales of private homes in Singapore rose 70.9 percent to 834 units in July from 488 homes sold in June. However, the upswing is expected to be short-lived, as analysts point to shrinking inventories and a limited pipeline of new launches.

Based on data released this week by Singapore’s Urban Redevelopment Authority (URA) last month’s performance, which excludes sales of hybrid public-private executive condos, was well above the 2022 average of 722 private homes sold each month. However, last month’s figure still fell far short of the 1,602 units sold in July last year, as a scarcity of available homes slowed the market.

Private home sales in the first seven months of 2022 have now totalled just 5,056 units, which is down 37 percent from the 8,061 homes sold in the same period last year, the data showed.

With developer inventories dwindling to a combined 5,859 unsold homes by end-July from 9,044 units at the start of the year, based on separate Knight Frank data, and with few new projects entering the market, analysts are expecting a further decline in sales in the remaining months of the year.

“For the rest of 2022, residential sales momentum is expected to ease, on the back of a thinning pipeline of launches,” said Catherine He, director and research head for Singapore at Colliers.

UOL Project Nearly Sold Out

The spike in July was led by a strong reception for the launch of AMO Residences in Ang Mo Kio – a joint venture by listed local developer UOL Group and its subsidiaries, Singapore Land and Kheng Leong.

UOL and its stablemates sold 366 out of 372 homes made available in the project on its launch weekend, as they found owners for 98.4 percent of their supply at a median price of S$2,110 per square foot.

With AMO Residences accounting for more than 40 percent of all sales booked by developers in the city-state last month, analysts saw the sell-out as evidence of an undersupplied market.

“The strong take-up reflects pent-up demand for projects with an attractive location and proximity to amenities in District 20, as it has been eight years since a major project was launched in the area,” said He at Colliers. “With AMO residences in close proximity to several reputable schools, it probably also attracted nearby upgraders like families with young children.”

Having secured the project site through a S$381.4 million ($287 million) tender in May last year, the UOL development broke an eight year drought for major projects in District 20, a heavily residential area that includes the Ang Mo Kio, Thomson and Bishan neighbourhoods.

That strong performance in Ang Mo Kio helped sales in Singapore’s suburbs, what the URA refers to as the Outside Central Region, lead all location categories last month with with 485 homes sold.

By comparison, 185 units in the city centre or the Core Central Region found buyers, and in city fringe areas, officially called the Rest of the Central Region, buyers signed contracts for 164 dwellings last month.

Supply Drought Crimps Sales

Colliers’ He said buyers are likely to turn more cautious and selective for the rest of 2022 “against the backdrop of macroeconomic uncertainties, prices at historic highs, and rising mortgage rates”.

She estimates new home sales will soften to around 8,000 units sold by the end of the year from 13,027 transactions seen last year, and projected price growth will slow to 5 to 7 percent this year from the 10.6 percent spike in 2021.

Tricia Song, head of research for Southeast Asia at CBRE noted that rising interest rates could “temper optimism” in the second half of the year, after the country’s three largest hiked mortgage rates in June.

URA data published last month showed prices of private homes in Singapore rose by 3.5 percent in the second quarter, quickening from the 0.7 percent uptick in the first three months. Home loan rates in the city-state have risen by at least 1.6 percentage points from the average 1.15 percent per year recorded in December 2021.