Government HDB strategy working: Private home sales drop by more than 23% in June

Blame strong competition from HDB’s 25,000 new flats.

June private home sales dipped more than 23% M-on-M to 1,394 units transacted. Discounting Executive Condominium units, the drop was almost 25% to 1,182 units.

“It is not surprising to see the decline in private housing transactions in June,” says PropNex Corporate Communications Manager Mr Adam Tan, “due to the June school holidays, when many families may be abroad for holidays.”

“In addition, the decline in private housing transactions can also be attributed to the HDB announcing that they will be building 25,000 new flats in 2011,” continues Mr Tan, “so some potential first-time buyers in the middle income bracket may switch to the public housing market instead.”

“Furthermore, with more than 10,000 new private homes expected to enter the market in the second half of 2011, consumers may be waiting for more choices in other locations across the island,” says Mr Tan.

“The increasing prices of private property may also have resulted in some resistance from buyers,” elaborates Mr Tan. He cites the recent 2Q11 URA private property flash estimates whereby the Price Index of private property increased by 1.9% across Singapore.

In June, the majority of transactions came from projects in the Outside Central Region, with three projects having sold over 100 units: Seastrand sold 120 units at a median price of $879psf, The Miltonia Residences sold 149 units at a median price of $877psf, and Woodhaven sold 155 units at a median price of $981psf.

Mr Tan acknowledges that these three OCR projects were instrumental in the robust sales figure of June, accounting for 424 units, or about 30.4% of all the units sold.

“In June, transactions of private housing in the OCR amounted to 1,045 units, or almost 75% of all transactions,” he observed. “The strong showing in the mass market private property does indicate the sustained interest by genuine HDB upgraders.”

“The volume of sales should continue to maintain at levels of above 1,400 units per month for the next few months,” continues Mr Tan, “pending further attractively-priced launches.”

“In the first half of June, 150 units from Blossom Residences and 80 units of Skyline Residences have already been sold,” continues Mr Tan, “so we can expect about 1,400 units to be sold in July.”

“However,” he says, “the economic fundamentals present in the first half of this year are still present, therefore home buying should still continue at a healthy rate.”

“There will however be pressure for developers to price their projects reasonably,” he explains, “as the increased supply will mean that buyers can afford to be more selective in their choices.”

“To keep home sales robust,” concludes Mr Tan, “developers must continue to remain sensitive to the pricing of their projects.” 

Photo from pujangga74