Property profit drought intensifies as private home sales plunge 50% in 2014

Sales volume will remain muted next year.

The year 2014 will close on a very muted note for local developers. Analysts estimate that the total number of new private homes sold for the whole year is likely to be around 7,500-7,800 units, or almost half of the 14.948 new homes sold in 2013.

According to CBRE, a total of 7,137 private homes and 1,409 ECs have already been sold in the first 11 months of the year. This figure is unlikely to increase significantly in December, given the traditional year-end sales lull.

“As the year draws to a close in a fairly quiet December, the total number of new private homes sold for the whole 2014 is likely to be around 7,500-7,800 units, compared to the 14,948 new homes sold in 2013. Among the various cooling measures introduced by the government, the Total Debt Servicing Ratio (TDSR) framework has been most impactful, slashing the sales volume by half,” said Desmond Sim Head of CBRE Research, South East Asia.

Here’s more from CBRE:

 Home prices, on the other hand, have declined by around 3.0% in the first nine months of 2014 as shown by the URA price index.

Looking to 2015, the sales volume of new homes will be at a similar level of 7,500- 8,000 units since the TDSR will continue to affect buyers’ access to funding.

As for price movements, CBRE Research is of the view that developers are prepared to hold prices as long as economic fundamentals remain healthy and buyers are able to service their loans.