Residential property sales surged in December 2020; high demand continues

Increase in sales is a positive note for real estate.

Residential property sales skyrocketed in December 2020 to the surprise of some analysts as the month is often considered as a slow month for real estate.

Goh Jia Ling, manager of Research in Singapore and Southeast Asia at CBRE, said developers launched 1,349 units in December 2020 with a cumulative 3,147 units launched in Q4 2020, representing a jump of 41.4% compared to the same period last year.

In the Urban Redevelopment Authority sales survey, new home sales remained brisk in December, rising by 57.2% MoM to 1,217 units. Including Executive Condominiums (EC), new home sales rose 53% MoM. Compared to a year ago, sales excluding ECs climbed 126.2% YoY.

Leonard Tay, head of research at Knight Frank Singapore, said sales volume in the Core Central Region decreased 29.4% MoM with a total of 60 units sold in December, and this region continued to lag behind the Rest of Central Region and Outside Central Region for much of 2020.

Christine Sun, senior vice president of research and analytics at OrangeTee & Tie, said the surge in sales was due to Singaporeans deferring their travel plans, with more locals visiting showflats during the holiday season.

All three analysts agreed that the most successful launch was the Clavon, with 473 units sold with a take up rate of 74%.

Prices to increase as demand continues in 2021

The surge of sales in December 2020 may well continue through 2021, and supplies may not start declining this year.

Sun said developers have been paring down their unsold stock as many projects have been selling units consistently throughout the pandemic. The number of planned launches may also decrease as many mega projects have been launched over the past three years.

She added that new land supply in the suburban and city-fringe areas have dipped very low since the end of the last collective sales cycle, and government land sales have also been moderated over the past few years.

“The imbalance between supply and demand may keep home prices firm and even rising in some popular areas where new supply is limited. Prices at many recent launches have already increased last year despite the pandemic and macroeconomic uncertainties. New home prices are expected to move higher this year, possibly by 2% to 5%,” Sun said.

Ling agrees that the demand drivers in 2020 will still be applicable in 2021, but argues that there is a relatively healthy pipeline of launches in 2021. She expects new home sales in the region to fall by 8,000 to 9,000 units.

2020 has performed well market-wise, and had even exceeded expectations despite countrywide lockdown brought by the circuit breaker. With optimism on the nationwide vaccine rollout, market sentiment may soon slowly recover.