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News Release

Singapore

Jones Lang LaSalle’s Perspective: URA Private Residential Property Transactions for February 2009

Market rebounding or just a blip?


SINGAPORE, 16 March 2009 – Affordable pricing coupled with the attractive loan schemes i.e. interest absorption scheme have resulted in a return of buyers’ interest in February. It has been more than one year since we last saw total transactions surpassing the 1,000 mark. In February some 1,323 units were sold - a ten-fold increase from the preceding month (107 units) and over  660% increase compared to a year ago at 174 units. This unusual demand blip is some 23% from the historical peak attained in August 2007. This strong monthly demand performance came from the OCR with 63% of total sales originating in this region.

Table: Total Units Sold (Landed + Non Landed)

CCR
OCR
RCR
Total
Jun-07
387
361
627
1375
Aug-07
583
803
337
1723
Sep-07
294
132
88
514
Oct-07
135
235
196
566
Nov-07
131
159
308
598
Dec-07
175
72
58
305
Jan-08
105
162
53
320
Feb-08
38
72
64
174
Mar-08
87
123
91
301
Apr-08
28
222
38
288
May-08
163
190
100
453
Jun-08
165
181
455
801
Jul-08
83
541
277
901
Aug-08
106
103
111
320
Sep-08
70
82
224
376
Oct-08
14
71
27
112
Nov-08
63
102
28
193
Dec-08
64
34
33
131
Jan-09
13
45
49
107
Feb-09
102
840
381
1323

Source: URA/Jones Lang LaSalle Research

The overwhelming response at the soft launch of the two developments – Caspian and Alexis has pushed developers’ confidence up resulting in a larger that expected release of new supply. New launches for February registered 1,069 units, up by more than 4 times the 204 units released in January and 3 times more than a year ago.

Table: Total Launches (Landed + Non Landed)

CCR
OCR
RCR
Total
Jun-07
422
612
103
1137
Jul-07
372
290
642
1304
Aug-07
660
782
443
1885
Sep-07
369
132
73
574
Oct-07
166
172
291
629
Nov-07
95
223
282
600
Dec-07
247
81
118
446
Jan-08
141
232
37
410
Feb-08
31
205
107
343
Mar-08
108
394
140
642
Apr-08
17
246
12
275
May-08
179
119
178
476
Jun-08
221
236
612
1069
Jul-08
131
636
555
1322
Aug-08
82
10
102
194
Sep-08
258
139
370
767
Oct-08
74
63
22
159
Nov-08
200
99
83
382
Dec-08
7
37
113
157
Jan-09
0
116
88
204
Feb-09
30
680
359
1069

Source: URA/Jones Lang LaSalle Research

As non-landed housing market continues to dominate the overall market activity, landed property remained in the background. New landed housing supply remained relatively minuscule at only 10 units from MontClair @ Whitley by East Coast Properties Pte Ltd in the CCR. While no sales were reported in this project, overall demand showed positive growth albeit marginal, with some 35 units landed properties absorbed islandwide.

The surge in market interest supported by affordable pricing and pent up demand from almost five months of very limited transactions, has led to all three regions registering take up rates exceeding 100%. The last time something like that happened was in April 2008.

Table: Take up rate (Non Landed)

CCR
OCR
RCR
Jun-07
1.21
0.68
2.1
Jul-07
1.09
1.26
0.98
Aug-07
0.88
1.03
0.78
Sep-07
0.7
1.55
1.11
Oct-07
0.8
1.3
0.67
Nov-07
1.36
0.67
1.09
Dec-07
0.71
0.98
0.47
Jan-08
0.74
0.63
1.36
Feb-08
1.23
0.32
0.6
Mar-08
0.81
0.3
0.66
Apr-08
7.67
1.02
3.27
May-08
0.91
2.25
0.56
Jun-08
0.76
0.65
0.74
Jul-08
0.62
0.86
0.5
Aug-08
2.29
0
1.21
Sep-08
0.29
0.67
0.6
Oct-08
0.77
1.38
2.25
Nov-08
0.23
1.1
0.33
Dec-08
2.86
1.69
0.28
Jan-09
-
0.43
0.52
Feb-09
4.15
1.22
1.04

Source: URA/Jones Lang LaSalle Research

Dr Chua reckons “This strong market showing in February is likely to be a short term blip in the overall larger scheme of things. The pricing of projects within the affordable total quantum range has coincided with preceding periods of stable and strong public housing prices. These two factors have supported the renewed buying interest shown in February.” On the sustainability of this trend, Dr Chua opined “market forces have pointed towards greater contraction in the real economy and we are likely to feel the impact of job contraction and the loss of consumer confidence over the next 6 to 9 months. While buyers will remain active, hard core incentives such as pricing discount, rental guarantees etc may be required to maintain the same volume of transactions as buyers become more selective and conservative in their outlook.”

Going on, he said that this trend is already developing. The strong take up in CCR can be attributed to the reduction in pricing as developers came to realise that affordability is the main concern for buyers. The three developments which registered the top three highest sales for this month include D'Chateau @ Shelford by East Coast Properties Pte Ltd (21 units sold), RV Suites by Fortune Royal Pte Ltd (20 units) and Parc Sophia by Oxley Ventures Pte Ltd (17 units sold). Current median pricing for these developments have reduced almost 11- 20 % from their initial launch period and the most popular units sold were typically 1 – 2 bedroom. On the other hand there are two developments within the CCR that recorded no sales in February- Shelford Suites (5 units launched) and Wilkie Studio (15 units launched) by the same developer, City Developments.

Sales volume in RCR and OCR were even more stunning in comparison to CCR. Both submarkets have recorded improvements in sales over the past one to two months. The star performer for this month is the OCR where some 830 units were sold -  a historical peak since the series started in June 2007. Affordable pricing at Caspian and The Quartz has helped fuelled market demand amidst a slowing economy. Median pricing for The Quartz in December 2008 were at some $795 per sq ft has since contracted to $591 per sq ft by February 2009. Similarly median prices for Livia have softened from $650 per sq ft - $680 per sq ft over the past few months to $620 per sq ft in February.

The strong sales performance in February has given developers a good indication on what buyers are expecting in a weak market. Affordability remains the priority. Based on Jones Lang LaSalle analysis of the data, the median price (low) for OCR of about $550 per sq ft, RCR at $670 per sq ft and CCR at $1,000 per sq ft are levels where the market is able and willing to settle for now.

Going forward, Dr Chua says “consumers are likely to become even more demanding but this is the opportunity for established developers to distance themselves from the boys through positive pricing strategy that not only includes monetary incentives but also softer incentives such as a good asset management program to attract buyers.”