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The sales volume of 847 units in June falls within expectations
SINGAPORE, 15 July 2010 - The latest URA data showed that monthly sales volume slid by 22% m-o-m to 847 units in June 2010. This fell within our earlier expectations for sales volume in June to close around 650 to 850 units as both developers and buyers held back their launches and purchases amidst heightened uncertainty from the eurozone debt crisis.
Of the 1,010 units that were launched, 847 units were sold; this translates into a take-up rate of 84% which marked another slide from the previous month, indicating a cooling demand in the primary market.
Table1: Total island-wide units (landed + non-landed) sold
Source: URA/ Jones Lang LaSalle Research
The Outside Central Region (OCR) led the way in sales volume with 429 units sold in June on the back of some major launches which included The Minton and Waterfront Gold. The former saw 173 units sold out of 200 released units (take-up rate: 87%) while the latter sold 77 out of 157 released units (take-up rate: 49%). The Minton, which was sold at a median price of around $871 per sq ft, remains affordable under current market conditions; on the other hand, Waterfront Gold had a weaker showing of only 49% taken up. The total quantum payable is possibly larger than what the market is willing to absorb at this moment at over $1 million for a 3-bedroom unit at 1,195-1,227 sq ft.
In contrast, take up in the Rest of Central (RCR) was less encouraging as the comparatively higher pricing of major launches made it more difficult for such units to be absorbed by the market under current market conditions; 275 units were sold out of 445 released units in the RCR. Similarly, projects that command a lower price quantum continued to be well-received and these include La Brisa which outperformed expectations with 98% of the project taken up. The total quantum payable for a typical 2-bedroom unit at 517-689 sq ft works out to about $435,000-$710,000.
The recent new launches in early July has shown that projects that offer good branding and choice locations continued to be favoured by buyers. Developers that are holding onto prime sites may continue to launch their projects but in phases to control the new supply and benefit from price increases if past launches are well-received. We can expect sales volume to remain strong in July before consolidating as we enter the lunar month of Hungry Ghost Festival in August. Bargain hunting is likely to be the main focus of buyers and we can expect a pick up in sales activity although it is likely to remain moderate.
On the back of this, we reckon our projection for sales volume to range between 13,000 and 14,000 units in 2010. Dr Chua Yang Liang, Head of Research South East Asia commented, “While transaction volume has declined, prices are likely to hold up. As the previous period of capital appreciation has already over capitalised the market’s worth, we can expect a more moderate buying mood backed by conservative global economic conditions and hence a continual slow down in capital values growth.”
Dr Chua Yang Liang
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