The increasing number of unsold units coupled with the COVID-19 outbreak will see buyers having the upper hand.
Buyers in Singapore are seen to have the upper hand in the private residential market this year due to the rising number of unsold inventories, reported The Straits Times.
Around 40 new project launches are currently in the pipeline, while unsold inventory last year stood at 30,473 units, according to CBRE Research.
The continuous increase in the number of unsold inventories predicted this year is also attributed to the falling demand from China due to the coronavirus outbreak.
Chinese buyers accounted for 19.3% of new home purchases in the Core Central Region (CCR) last year.
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“Now, in the light of the COVID-19 outbreak, Chinese buyers are unlikely to feature in the short term,” noted CBRE.
Hence, CBRE foresees that Singapore will be a buyer’s market this year and sellers may need to check prices and sweeten their offers to attract buyers.
While this year’s figures seem manageable compared to the previous peak of 39,184 units in 2011, developers may still be motivated to lower their prices or offer discounts as the stock of unsold homes increases in view of the upcoming launches.
It can be recalled that a record 52 launches last year boosted the new-sales segment, leading it to dominate the private residential market with 9,912 units sold, a 12.7% increase from 2018.
“The healthy absorption of new homes indicates the underlying strength of the market and improving buyer sentiment despite the weaker macroeconomic environment even with cooling measures in place,” said CBRE.
Developer reputation, a key differentiation in location, and pricing are also seen as factors for projects to do well.
In pricing particularly, the median price quantum for new homes hovered around $1.2 million per unit, although per sq ft (psf) prices were made at higher levels through smaller unit sizes.
The median size for units transacted fell to 721 sq ft in 2019 from 828 sq ft in 2017.
Units priced below $2 million accounted for 88.6% of all new homes sold.
CBRE believes that buyers will remain price-sensitive this year and will continue to be inclined towards smaller unit sizes. Thus, $2 million is expected to remain the sweet spot for investors.
And given the high land costs and poor consumer sentiment, home prices are expected to increase by about 1% this year.
The pressure on developers to lower prices or offer discounts is still not that significant as projects with ABSD deadline in 2020 have already sold all units or are almost fully sold.
Despite a challenging first half, CBRE still expects this year’s new home sales to hover between 7,000 and 8,000 units, while resale volume is expected to stand within the range of 6,000 to 7,000 units.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com