'Cooling' back in frame as Feb home sales rise

'Cooling' back in frame as Feb home sales rise

It seems the government's property cooling measures have lost their 'cool factor', as February marked the highest number of units sold by developers in a month since July 2009.
Urban Redevelopment Authority (URA) figures reflected a total of 2,413 private homes - excluding executive condominiums (ECs) - being sold in the month of February.

This is 29 per cent more than in January (the month that Chinese New Year fell this year) and more than double that sold in the same period last year.

If ECs were added to the mix, the spike was even more impressive, with a total of 3,138 units sold in February - up 51 per cent from January's 2,077 units.

The robust buying sentiment revived conjecture that the government could act again to puncture any possible property bubble in the making. It has taken several steps of late, including an additional buyer's stamp duty (ABSD), to cool the market.

A Ministry of National Development (MND) spokesman confirmed that the authorities were keeping a sharp eye on the developments, saying: 'The government will continue to monitor the market closely and, if necessary, we will introduce further measures to ensure a stable and sustainable property market.'

As a result of this strong market performance, policy risk has been elevated but not to a level where any immediate government intervention is expected. However, should transaction volume continue to rise unabated by March, then the risk of further measures is quite likely.

The main demand driver has been low mortgage rates, which are generally below 1.5 per cent. Short of having an interest rate policy of some sort, administrative measures have not been effective in reining in the buying penchant. Unless interest rates rise very significantly, it would have little impact on demand.

Moreover, the creative promotions and sweeteners dangled by developers in various forms to cushion the impact of the ABSD - such as part absorption of the stamp duty, price discounts, early bird or VIP preview prices, as well as furniture and fit-out vouchers - have also encouraged homebuyers to commit.

Sales of ECs (a type of hybrid public-private housing) also soared, with 725 units sold in February, more than treble the 205 units in January and almost six times the volume sold in the year-earlier period, making it the highest monthly figure since the resumption of EC sales in October 2010.

The increased demand for ECs was expected especially after the income ceiling for it was raised last August, resulting in a larger pool of eligible buyers.

Top-selling projects for the month included Parc Rosewood (380 units sold at $994 psf median price), Guillemard Edge in Geylang (275 units sold at $1,215 psf median price) and Watertown at Punggol (182 units sold at $1,341 psf median price).

Notably, Guillemard Edge - which sold all the units that were released - was one of the new launches during the month, together with other developments such as Bartley Residences and Casa Cambio.

Among ECs, Twin Waterfalls at Punggol was the most well received with 257 units sold at a median price of $727 psf.

The most expensive unit sold by a developer for the month was an apartment at Scotts Square, which transacted at $4,661 psf.

However the sales volume of such luxury homes continues to remain low with only 11 units priced above $2,500 psf being sold in February, putting sales in the high- end bracket at a 'standstill'.

The demand in the city centre is expected to remain subdued as it has a higher proportion of foreign buyers compared with suburban areas.

Much of the action was in the mass-market outside core region (OCR), with 1,830 units being sold in the month compared with 1,761 in the month before. This was despite the fact that the number of OCR units released by developers fell 21 per cent month- on-month to 1,567 in February.

Some 56 units were sold in the core central region (CCR) and 527 in the rest of central region (RCR).

The number of units launched but unsold has also risen steadily since last October - when it stood at 5,922 - to 7,586 in February.

Some consultants feel that with an increasing pipeline of projects rolling out in the months to come, demand could potentially continue to chase supply. This may result in the return of en bloc sales and reignite foreigner purchases.

Upcoming launches include Allgreen's 928-unit Riversails in Sengkang and MCL Land's 679-unit Ripple Bay in Pasir Ris.

Source: Business Times – 16 March 2012