August's numbers unlikely to improve

Muneerah August 30, 2014

Following URA sales figures last months, analysts are expecting August to be a slow month as it is the hungry ghost month and home buyers tend to stay away from house-hunting.

Christine Li, Research Head at OrangeTee, said, “Sales activities could pick up in September or October as a few large scale projects such as Highline Residences and Marina One are expected to hit the market before the year-end lull period. However, as these projects have high quantum due to their premium locations, sales volume would be very much dependent on the pricing of these projects.”

Executive Condominium (EC) sales are likely to pick up pace for the rest of the year, and probably overshadowing the sales of mass market projects.

“Due to the 15-month wait before developers could launch their new ECs, there has not been a single new EC project for almost a year leading to pent-up demand in the EC segment. This could help push the sales activities of the five upcoming EC projects that are expected to hit the market by year end,” she added.

As second-timers do not need to pay resale levy for these five EC projects, good take-up rates, of more than 30 percent for the first month of sales, are expected for these EC projects in view of the existing price gap between ECs and mass market homes.

Chia Siew Chuin, Director of Research and Advisory at Colliers International said developers are generally expected to continue to hold back on their project launches in August and the buying momentum, which is observed to be slowing down, is expected to remain sluggish during this traditional lull period.

“Buyers are likely to continue to face inertia to commit and competitive project pricing will remain the key determinant in moving sales. In cognizance of the above, primary market sales volume is expected fall to the region of 200 to 500 units in August before picking up again towards September,” she said.

In a recent report, DTZ expects transaction activity is likely to remain tepid for the rest of the year, given the weak sentiment and expectation of further price declines.

“Potential buyers are likely to continue to wait on the sidelines while foreign demand may fall further as investors look to other sectors or countries with a rosier outlook. Furthermore, seasonal factors and cultural festivals such as the Hungry Ghost Festival in Q3 will also keep buying interest at bay,” DTZ said.

However, compared to the secondary market, demand in the primary market is expected to hold up better as developers have more options to promote projects strategically and creatively to entice buyers.

DTZ foresees “impressive sales rates such as those seen in the pre-TDSR periods are unlikely”.

Additionally, developers are likely to proceed with caution, and some may cut prices to improve their sales rate as the number of unsold units in launched projects continues to increase. Developers are expected to launch projects selectively, or in phases, to test market reaction. DTZ expects launches for the whole of 2014 to be less than 10,000 units.

 

Muneerah Bee, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email muneerah@propertyguru.com.sg

 

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