Chart of the Day: Singapore’s new private homes crashed 63.8% in 3Q

Developers had to sell more from existing projects.

Economic growth has been flat, affecting the private property market and making it sluggish. The quarter under review saw slow sales activities in the primary market. The lacklustre market may have been a result of fewer units launched for sale.

According to a report by Savills, there were only 1,294 new private residential units launched in 3Q, less than half of the 2,843 units launched last quarter. Of this number, only 780 units were from new projects. This was a drop of 63.8% from the 2,152 units from new projects launched in Q2. 

Savills adds that evidently, developers were more focused on clearing the units in their existing projects than introducing new projects. In fact, no new residential project was launched in August which saw only re-launches of previous projects. A possible reason could be that the Hungry Ghost Festival fell on 21 out of 31 days in August.
This has always been a traditionally quiet time for the property market when developers avoid launching new projects because superstitious buyers consider it in auspicious to buy property during this period.

Here’s more from Savills:

According to URA’s statistics for the third quarter of 2014, the number of new private residential units sold fell by 42.6% QoQ, to 1,531 units from 2,665 in Q2. Major projects launched in Q3 included City Gate, Highline Residences and Seventy Saint Patrick’s, which achieved take-up rates of 59.3% (89 out of 150 units), 88.8% (142 out of 160 units) and 78.6% (110 out of 140 units) respectively within their first month of launch. 

Given the lacklustre market, these projects performed well, bearing out current sentiments in the market that buyers are not only sensitive to competitive pricing but are also very selective. One of the reasons these projects sold well could be their proximity to an MRT station. The high take-up rate at Highline Residences came as no surprise, with the main contributing factor being the pent-up demand for new private housing in that area, given the absence of any new private residential projects in the last seven years. Hence it can be seen that there is still strong underlying demand even as buyers’ credit becomes limited under the current Total Debt Servicing Ratio (TDSR) framework.