Home buying spike in July will be short-lived

Newly confident home buyers will snap up deals this month but the purchasing spree will peter out by end-2012, says Colliers International.

Sales volume for July is expected to rise above June’s tepid level of 1,371 units sold, with new project launches such as Parc Olympia, Parc Centros and V on Shenton, driving the renewed but still-below peak demand.

"Although price resistance amid record high prices would likely keep July’s sales volume at below the sizzling levels seen from February to April 2012," said Ms Chia Siew Chuin, Director of Research & Advisory, Colliers as part of an outlook report on the Singapore residential market after the Urban Redevelopment Authority released the official June statistics. 

Here's more from Colliers International:

Outlook for July 2012. The end of the June school holidays and the 2012 UEFA European Football Championship would see buyers returning to the market in July. The recently announced advance estimates by the Ministry of Trade and Industry (MTI) indicated that Singapore’s economy grew by 1.9% year-year (YoY) in 2Q 2012, up marginally from the 1.4% YoY growth in 1Q 2012. With MTI maintaining its forecast for Singapore’s economic growth at between 1% and 3%, market confidence and buyers’ sentiment is expected to remain positive.

In addition, the impending lunar 7th month (Hungry Ghost Month) which will commence on August 17 this year could also see superstitious buyers looking to pick up homes in July ahead of the traditional inauspicious home-buying period.

A number of major new project launches planned for July such as Parc Olympia, Parc Centros and V on Shenton, could also lead the demand.

Hence, the above factors could likely shore up developers sales volume for July to above June’s level of 1,371 units, although price resistance amid record high prices would likely keep July’s sales volume at below the sizzling levels seen from February to April 2012.

Outlook for 2H 2012. Going forward, while home-buying sentiment remains positive in light of sustained albeit moderated economic growth, low interest rates and rising inflation, buying euphoria is expected to ease as pent-up demand is gradually being met. New sales volume is therefore expected to moderate to between 8,000 and 10,000 units for 2H 2012. This will bring 2012’s total sales number to around 20,000 to 22,000 units.