This new property is still 40% unsold 5 years after its launch

Price had dropped 13-20% since 2008.

CIMB analysts visited two new show flats, Rivertrees Residences and Riverbank @ Fernvale, in Sengkang over the weekend. 

They also viewed units on sale across the mass to high-end segments in the resale market in the past week.\

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The take-up for Rivertrees and Riverbank was not bad, with over 50% of both projects (533 and 489 units respectively) sold as of last weekend.

We believe the biggest attraction of these new launches was pricing. At ASPs of S$1,000-1,050psf, we believe the developers (FCL and UOL) are barely making net margins of 9-11%, with prices some 5-8% below this time last year.

With land prices still elevated, pressure on developer margins shouldcontinue. Not surprisingly, agents on site were eager to pitch the products on price.

The buyers were largely locals – we saw few prospective foreign viewers at the showflats. Small units (1-2 bedders) averaging 500-700sf were the first to be sold, though we noticed equally-strong demand for units in the 900-950sf range as well, which suggests to us that there is an equal mix of new home-buyers and investors.

Mortgage packages offered by banks remain very attractive with floating rate spreads at 80-100bps above 3-month SIBOR.

The secondary market. Similar to the primary market, upgrader units in the resale market are “easier” to sell at higher S$psf pricing, according to agents we spoke with, due to their low ticket size. But when it comes to larger units in prime districts, volume becomes very thin.

Goodwood Residences, a newly completed development located in the prime district of Newton/Bukit Timah, is still c.40+% unsold and is priced at S$2,400-2,600psf or 13-20% below its launch price in 2008.

We understand that sales have been very slow. Overall resale volumes have come off considerably, with some agents guiding a 30-40% yoy drop in transactions in the last three months.

Buying activity is in the S$1m-1.5m price range, implying a 5-8x home price to household income ratio (top 20th percentile income bracket), still below the peaks of 1996 and 2007. We believe there is less investment/speculative demand in this cycle, with buyers generally not overstretching to own residential properties.

We do not see the Singapore housing market turning around anytime soon nor property developers increasing exposure in the sub-sector.