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News Release

Singapore

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

Transaction volume contracted by 29% in October 2009


SINGAPORE, 16 November 2009 – As expected, total sales volume in the private residential market contracted further on the back of the seasonal slowdown and the government’s recent announcement of anti-speculative measures on 14 September 09. Overall monthly volume of purchases has declined by 29% to 811 units. This has also been the third contraction since August 09 and also the second lowest sales volume achieved for the first ten months of 2009 since January 09 when 108 units were sold. On an annual comparison, the current volume is some 587% higher with only 118 units sold a year ago, in October 2008 when the current crisis was just unfolding.  CCR led the market contributing to some 311 units or 38% of total transactions. The impact of the policy was most felt in the OCR and RCR as these markets are driven mostly by HDB upgraders who are more sentiment driven.

Table 1: Total islandwide units (landed + non-landed) sold
 
CCR
OCR
RCR
Total
Oct-08
17
74
27
118
Aug-09
552
531
722
1805
Sep-09
152
560
560
1,143
Oct-09
311
251
249
811
Source: URA/ Jones Lang LaSalle Research

On new launches, this has contracted 60% (566 units) from the 1,413 units launched in September 2009. CCR is the only submarket where there was a positive increase in new launches (by 67%) – driven mainly by Cyan by Far East Organization (Bukit Timah Road), Trilight by Ho Bee Group (Newton Road) and Lincoln Suites by reported joint venture Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group (Khiang Guan Avenue).
 
Table 2: Total islandwide units (landed + non-landed) launched
 
CCR
OCR
RCR
Total
Oct-08
74
78
22
174
Aug-09
537
287
789
1,613
Sep-09
203
579
631
1,413
Oct-09
339
187
40
566
Source: URA/ Jones Lang LaSalle Research

In the non-landed market (where the bulk of the sales is transacted), only CCR has shown a positive growth in demand whereas both OCR and RCR witnessed contraction in total volume sold. In this month, OCR registered the largest decline of 56% m-o-m, followed by RCR which saw decline of 42% m-o-m.

CCR is the only submarket where total sales grew by 97% m-o-m to 297 units. Two projects with strong take-up in CCR include – Cyan which sold 81 units out of 90 units launched at a median price of $1,821psf, and Lincoln Suites which sold 53 units out of 56 units launched at a median price of $1,845 psf. Buyers in this submarket are generally high net worth individuals and this has supported selling prices of above $3,000 psf such as in the Nassim Park Residences which sold five units at $ 3,089 psf, the Seven Palms which sold a unit at $3,429 psf and the Boulevard Vue which sold a unit at $ 4,150 psf.

Impact of September 14 Announcement on anti-speculative measures

The recent announcement of measures to curb speculative behaviour seems to have taken effect as seen in the subsales market. Proportion of subsales level has fallen to 7.9% in October from the 12% recorded in September.
 
The effect of the anti-speculation measures is targeted more at the buyers in the non-prime market who typically rely more financing to own a private residential property. The removal of Interest Absorption Scheme and Interest Only Loans also forced these buyers to be more prudent in their purchases as they are no longer allowed to defer their loan repayment. The reassurance of ample supply as provided by the government’s injection of sites into the 1H10 Confirmed List, under the Government Land Sales program, has also softened the run-up effect (as caused by possible speculative sales in view of a future supply shortage).

Overall, the effect of the government’s announcement had a lesser effect on buyers (in terms of size of contraction) than on the developers. While one would expect developers to capitalize on the buying trend, they were surprisingly more cautious and anticipated a bigger demand pull back, suggesting that the market could be closing in on its peak as developers are no longer as confident of the sustainability of the current market movement.

Dr Chua Yang Liang, Head of Research South East Asia says “looking ahead, transaction volume in the non-landed segment is likely to contract by a further 10-20% due in part to the seasonal slow down and also the effect from the recent government announcements. However should housing price growth continue to surge ahead of economic fundamental despite these recent moral persuasion by the government to cool residential demand, further anti-speculative measures with a bigger bite could be introduced e.g. capital gains tax say for those who flip within a two year period of the first purchase."
 
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.