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News Release

Singapore

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

Transaction volume contracted by 39% in August 2009


Singapore, 15 September 2009 – As expected, total sales in the private residential market contracted due to the seasonal decline associated with the Hungry Ghost Festival. Overall monthly volume has declined by 39% to 1,699 units. This is a sharp contrast to last month’s sales volume of 2,772 units which was the highest monthly sales level since the series started in June 2007. On an annual comparison, the current volume is some 423% higher with only 325 units sold a year ago, in August 2008.  RCR led the market contributing to some 722 units or 42% of total transactions.

Table 1: Total islandwide units (landed + non-landed) sold

CCR
OCR
RCR
Total
Aug-08
109
103
113
325
June-09
526
432
867
1825
July-09
515
1505
752
2772
Aug-09
449
528
722
1699

Source: URA

Developers have also held back launches as the cultural taboo of purchasing new homes during the Hungry Ghost Festival outweighed the strong market performance recorded in the preceding month. Overall new launches contracted 43% (1,641 units) from the 2,878 units launched in July 2009. RCR is the only submarket where there was an increase of over 70% in new launches.

Table 2: Total islandwide units (landed + non-landed) launched

CCR
OCR
RCR
Total
Aug-08
82
10
102
194
June-09
399
403
780
1637
July-09
483
1856
539
2878
Aug-09
438
284
919
1641

Source: URA

In the non-landed market (where the bulk of the sales is transacted), all submarkets witnessed a contraction in total volume sold with OCR registering the largest decline of 64% m-o-m, followed by CCR and RCR which saw declines of 12% m-o-m and 4% m-o-m, respectively.

Despite having a contraction in sales volume to 501 units, take-up rate remains high for all submarkets especially in the OCR where the take-up rate was highest at 208%. Good accessibility and affordable total quantum (smaller sized units) are the main driving forces behind the strong sales. Two projects with strong take-up include - Optima @ Tanah Merah which sold 164 units at a median price of $843 psf, and Meadows @ Peirce which sold 52 units at a median price of $894 psf.

In the CCR, despite a slight dip in sales by 12% m-o-m to 437 units, take-up rate was almost 100%. Most projects in the CCR continued to record healthy sales with one unit in Scotts Square transacting at a record of $4,304 psf. This is quite remarkable considering that the historical median high recorded for Scotts Square was at $4,612 psf in March 2008.
Despite weak economic fundamentals, the private residential market continues to buckle the trend. Overall islandwide demand remains strong with take-up rates for all properties registering 104%, a contrast to the previous month where the take-up rate was only 96%. The buying sentiments have also trickled down to the secondary market. According to Jones Lang LaSalle preliminary data, capital values in the resale market recorded increases of between 8-10% q-o-q in the prime districts (9-11).

Looking ahead, transaction volume in the non-landed segment is likely to slow due to seasonal factors. With the recent announcement of measures to curb speculative behaviour, transaction volume could take a further hit, possibly by another 10-15%. Jones Lang LaSalle’s Head of Research- Southeast Asia, Dr Chua Yang Liang notes, “the government has sent a strong message to the market that the state is monitoring closely and will intervene should the strong sales performance get overtly inflated by sentiments and becomes unsustainable. While monthly demand for new launches is unlikely to fall to the level recorded after the collapse of Lehman Brothers, a more conservative volume of possibly between 500 and 550 units per month could be expected if price and interest rates – the two key driving forces in today’s market -  remain stable.”

 

Explanatory Notes:

  • Core Central Region (CCR): which comprises Postal Districts 9, 10 and 11, the Downtown Core and Sentosa
  • Rest of Central Region (RCR): Rest of Central Region (RCR) which comprises the Central Region outside the CCR
  • Outside Central Region (OCR): Area outside Central Region
  • Landed Housing: Include bungalows, semi-detached and terrace houses
  • Non-Landed Housing: Include apartment/condominium
  • Median price: For landed residential properties (i.e. detached, semi-detached and terrace houses), the median price per sq m is computed based on their land area. For strata sub-divided properties, such as apartments, condominiums, cluster housing, townhouses, the median price per sq m is computed based on their strata floor area.
  • Take up rate: Number of units sold over number of units launched. Number of units sold in that month can surpassed the units launched as some buyers are buying unsold units released in the previous months.