Price reductions flood Singapore’s residential market amid anaemic sales volume

The OCR got most of the attention.

The recent sharp increase in interest rates brought renewed affordability concerns to Singapore’s residential market.

According to a report by Colliers International, the 818 units released by developers in the Outside Central Region (OCR) constituted 65.5% of island-wide launches while the 781 mass-market homes sold accounted for a significant 58.8% of all new home transactions in 1Q 2015. Due to the step-up in project launches in the segment, launch volume more than doubled from the 330 units launched in 4Q 2014 while sales of mass-market homes improved 39.0% QoQ.

Nonetheless, these are still a far cry from the average launch and sales volumes of 5,025 and 4,927 units the market was recording, respectively, in the two years prior to the imposition of the TDSR in June 2013. CBRE says that new home sales has fallen substantially since the introduction of the TDSR framework at end-June 2013. As unsold units began to build up, the government also pulled back the sale of development sites for private homes so that developers now have fewer new projects in their stables compared to a year ago.

Colliers adds that units from some previously launched projects were also released with price reductions to lure buyers back into the market. These include non-landed projects such as the freehold Trilive and 99-year leasehold The Skywoods.

Similarly, homebuyers picked up 52 units at The Skywoods located in the Bukit Timah vicinity after its developer launched a star buy promotion for the project, which was first launched in September 2013, in order to clear its unsold inventory that stood at 241 units at the beginning of 2015.

Meanwhile, CBRE forecasts that going on to Q2 2015, the much anticipated launch of North Park Residences and Botanique at Bartley might boost the anaemic sales volume,

As at end-2014, there were 16,587 unsold units with another 10,155 planned units. This inventory of nearly 27,000 units is sufficient to meet the housing needs for at least three years if the annual demand stays at the 2014 level of 7,300 units.