Developers put the brakes on new launches as buyers hold

Sales volume seen to moderate further by 15% to 35% in June.

The latest URA data showed that 1,078 units were sold in May 2010, half of the transactions in the previous month as sentiments took a dip in the Singapore residential market amidst an unfolding debt crisis in the Eurozone. The Singapore Straits Times Index (STI) fell almost 230 points or 8% over 2 weeks from 10 May to 24 May 2010, according to the comment reported by Jones Lang LaSalle on Tuesday.

Developers were cautious to introduce new projects on the back of weakened buying sentiments. In total, 1,134 units were launched in May 2010. Project launches of over 100 units that became commonplace during the recent months came down to only two island-wide in May 2010. These projects include The Minton, a joint venture between Kheng Leong and Low Keng Huat (Singapore) Pte Ltd as well as Flamingo Valley by Frasers Centrepoint Limited, of which 300 units and 120 units were launched respectively.

The Rest of Central (RCR) leads the way in May by achieving a sales volume of 451 units, ahead of the Outside Central Region (OCR) (448 units) and the Central Core Region (CCR) (179 units). Where projects continue to offer choice location, the RCR saw all 78 units in Casa Aerata by Ecco Realty Pte Ltd fully sold and 80% of the 90 units launched in The Cascadia taken up during the month. Units from past launches continue to be absorbed by the market and these include projects such as Waterbank at Dakota by UOL Development Pte Ltd which sold 52 units and The Interlace by CapitaLand Ltd which sold 44 units during the month of May. As a result, the take-up rate in the RCR is the highest of all three regions at 121% (451 units sold out of 373 units launched). The CCR and OCR followed behind with a take-up rate of 88% and 80%, respectively.

“Compared to the collapse of Lehman Brothers in 3Q08, the impact of the Eurozone debt crisis on the Singapore residential market has been less destabilising thus far. The sales volume for the first two months of 2Q10 totalled 3,286 units, higher than the 1,603 units sold in 3Q08. The sales volume of 1,078 units in May falls in line with our projections of a more conservative take-up,” Dr Chua Yang Liang, Head of Research South East Asia commented.

Nevertheless, both developers and buyers are expected to hold back their launches and purchases in June 2010 as they adopt a wait-and-see attitude on the back of the heightened uncertainty arising from the Eurozone debt crisis. As a result, the sales volume is expected to moderate a further 15% to 35% to around 650 to 850 units during the month of June. “We hold our view that the monthly sales volume will likely hover around 800 to 1,000 units per month for 2H10 as the market sentiments stabilises such that the full year sales volume for 2010 closes between 13,000 and 14,000 units,” Dr Chua added.