Private home sales fell 11% in January 2011

New projects that were launched in January saw weaker take-up of less than 50 percent.

According to Jones Lang LaSalle, monthly sales volume for private residential units excluding executive condominiums fell to 1,189 units in January. While the January sales volume saw a noticeable decline, the result only captures 16-days of the January 14 policy effect. This January number is likely to be tainted by the stronger than expected fourth quarter showing in market demand (despite being a seasonal lull).

Nevertheless, based on Jones Lang LaSalle observation, new projects that were launched in January generally saw weaker take-up of less than 50%, the only exceptions being Spottiswoode 18 and Loft @ Holland which recorded over 80% of the units launched that were sold.

Separately, from a geographical perspective, the Rest of Central Region gave a greater showing as compared to the other two regions. The RCR recorded sales improvement of 42% compared to Core Central Region and Outside Central Region which recorded declines of 55% and 2%, respectively. This provides the evidential support to our view that prime properties are likely to see better performance this year as savvy investors return to pick up bargains in this segment of the market.

A lack of large launches of new projects in the CCR was the main driving factor behind the fall in sales volume. While launches fell only marginally by 3% m-o-m to 240 units the limited new stock being added to the market has meant that buyers are constrained in their choice when looking to secure a property and less popular developments are seeing poor take-up rates. Indeed, there were no launches of more than 100 units in this region in January with the largest launch being the release of an additional 70 units at CapitaLand’s D’Leedon project, of which only 35 were sold. The only new launch in this region in January was the boutique Loft @ Holland where all 41 units were sold during the month to a median price of $2,107 psf. Sales activity has been muted at many developments in this region. At projects where more than 10 units were launched, only Loft @ Holland and The Vermont on Cairnhill (44 units) achieved take-up of 100%, while Loft @ Nathan sold 90% of the 20 units released at a median price of $1,946 psf. The bulk of the units in these projects fall within the 1- bedroom category and these translate to a total quantum sum of between $700,000 and $1,100,000, making these projects rather attractive to savvy buyers.

In contrast to the CCR, the sharp increase in sales volume in the RCR was driven by good take-up of units at some large projects that were launched this month and absorption of unsold units launched in preceding months. This was most notable at Spottiswoode 18, where all 251 units were released in January, achieving a take-up rate of 81.3%, or 204 of the units available. Prestige Heights achieved a take-up rate of 1,100% as 11 units were sold but only one further unit launched this month.

The Outside Central Region saw a similar pattern to the CCR, with muted take-up despite the launch of some large developments. Two developments, namely Canberra Residences, where all 320 units were released and Waterfront Isle, where 211 units were launched, contributed the bulk of new supply this month, but demand was limited with both projects achieving take-up of less than 50% of the units launched despite the relatively affordable price band of between $730- $1,070 psf.

Dr Chua Yang Liang, Head of Research South East Asia observed “As with all previous interventions, the market often responds correspondingly to any policy, at least over the first few weeks. This decline in sales volume of 11% is not therefore beyond expectations although the full impact of this recent policy cannot be determined by the January number as yet. We need to monitor the market and observe the February results before we can examine the 30 day pre-post policy effect and draw some conclusions on the effectiveness of the policy. As far as further measures are concerned, we think the risk is quite low at this moment”.