New private home sales crashes by 64% MoM in June

Analysts say this is the lowest since May 2020.

New private residential sales, excluding executive condominiums (ECs), went down by 64% month-on-month (MoM) in June 2022 to 488 private homes sold, the Urban Redevelopment Authority (URA) said.

On a yearly basis, URA figures showed that new sales excluding ECs went down by 44% from 872 sales in June 2021. With ECs transactions, new home sales dropped 63.9% MoM last month.

Real estate analysts said the decrease of new home sales stemmed from the holiday season in June, lack of new launches, declining housing supply as well as rising interest rates.

According to OrangeTee, the recent new home transactions are the lowest since May 2020.

“June’s sales (excluding EC) were at their lowest level since May 2020, when 487 new homes were sold during the Circuit Breaker period (7 April 2020 to 1 June 2020). Last month's sales were also the lowest June sales since 2015 when 375 transactions were inked,” said OrangeTee.

For Huttons, the depleting unsold inventory also limited buyers’ choices, which led to lower transactions.

Knight Frank Head of Research Leonard Tay said amidst the decrease in new sales, it is the first time since March 2021 that the Core Central Region posted the greatest number of units, with 206, which outperformed the Rest of Central Region and the Outside Central Region.

CBRE remained optimistic about new home sales, which it sees to post a significant uptick in July 2022 due to suburban launches such as AMO residences, with 372 units.

But Colliers cautioned against rising mortgage rates and cost of living that would impact buyers’ attitudes towards residential properties.

“However, for the majority of buyers, the buffer of liquidity built up during the pandemic from reduced travelling and spending would have dwindled,” said Colliers.

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“Moreover, with residential prices at a historic high, rising mortgage rates and the higher cost of living will further reduce discretionary income, thereby reducing the affordability of homes. As such, buyers are likely to turn more cautious and selective,” it added.

Colliers expects new home sales will moderate from the 13,027 units recorded in 2021 to around 9,000 units for 2022. Further, momentum in private home prices is expected to moderate and rise by just 4-5% in 2022, from the 10.6% growth registered in 2021.