Hard times, lean deals: Massive crash in private home sales feared in FY14

May’s stellar take-up simply isn’t enough.

Private developers are in for difficult news. Even after the stellar take-up of private homes in May, primary private home sales are still expected to dip 33% in 2014, according to OCBC.

According to the report, FY14 primary home sales are expected to slide to 10k units, with prices in the mass-market segment more at risk compared to mid-tier and high-end developments.

“We forecast FY14 primary private home sales to dip 33% to 10k units, and see prices in mass-market segment to be more at risk versus the mid-tier and high end. A positive catalyst over the mid-term could be the reversal of certain government curbs once headline prices (the URA price index) shows a decline in excess of ~10%,” noted OCBC.

Here’s more from OCBC:
In May-14, despite a 92% MoM pop in monthly sales to 1,528 units, the take-up rate of 82% in the month was lower on both a MoM and YoY basis (125% in Apr-14; 97% in May-13).

The eight new launches showed a diverse range of performance, with take-up rates ranging from 10% to 98%.

Amongst the four new mass-market launches, in particular, we found that developers that
were willing to price their projects competitively, such as Coco Palms (98% of launched units sold), performed better.