Developers brace for cheerless holiday season as home sales drop

Buyer interest will deteriorate further.

Sales of new non-landed private homes jumped to a three-month high in October, but analysts warn that the impressive monthly sales figure is unlikely to give developers much cheer as the holiday season rolls in.

Although October sales jumped 60% month-on-month to 546 units, this figure was distorted by an extremely low base in September. It is also 30% lower compared to private home sales in the same period last year.

October’s strong sales is likely to be the 2015’s last hurrah, as analysts expect market activity to drop in the last two months of the year. 

“We expect muted market activity in Nov and Dec as the holiday season begins; the full year 2015 sales figure could be below last year’s 7,316 units,” Barclays stated in a report.

Barclays added that last month's sales figure is the second-lowest October monthly sales figure after October 2008 when only 118 units were sold

Ong Teck Hui, National Director, Research & Consultancy at JLL, noted that economic uncertainties and the looming Fed rate hike will continue to weigh on buyer sentiment in the near-term.

“Notwithstanding the slight improvement in private home sales in October over the previous month, the market generally remains subdued as the effects of the cooling measures have been compounded by the economic slowdown and impending interest rate hike in the US. Market sentiments will remain soft through the year end, so we may expect muted market activity in the remaining two months when the holiday season begins,” he said.=

“Using developer sales of 653 units in November and December 2014 as a guide, new private home sales in the last two months of 2015 are likely to taper. With 6,383 units sold in the first ten months of 2015, the full year figure is likely to be below last year’s 7,316 units,” Ong added.