Developers’ New Home Sales Sink to Lowest on Record for H1 After Slow June
The sales of new private homes in Singapore plummeted to a record low in the first half of 2024, primarily due to a lack of new launches and price resistance amid weak market sentiment.
Tricia Song, head of research for Singapore and Southeast Asia at CBRE, reported that a total of 1,916 units were transacted in H1 2024. This includes the 1,164 units sold in the first quarter, marking the lowest half-yearly new home sales on record. This figure is 43.4% lower than the 3,383 units sold in the same period in 2023.
“Buyers are now more selective amid more choices and high price points, with near-term sentiment further dented by a delay in the timeline of US interest rate cuts,” Song noted.
The current sales figures are even lower than those recorded during the global financial crisis, which saw 2,287 units sold in H1 2008, and during the Covid-19 lockdown period, which registered 3,862 units in H1 2020, said Christine Sun, chief researcher and strategist of OrangeTee Group.
“Sales volume is likely to remain subdued until such time when interest rates come down. Prominent new launches that can spur market activity have also been lacking, against a backdrop of homebuyers on the sidelines who are reticent to commit to any purchase,” added Leonard Tay, Knight Frank Singapore’s head of research.
June Sales and Market Dynamics
According to Urban Redevelopment Authority (URA) data released on July 15, developers sold 228 private homes in June, excluding executive condominiums (ECs). While this was 2.2% more than the 223 units sold in May, it was 18% lower than the 278 units sold in June of the previous year.
No new residential projects were launched in June. The 118 units released were part of previously launched developments, noted Mogul.sg’s chief research officer, Nicholas Mak. He explained that June is typically a slow month due to the school holiday lull.
For the first six months of 2024, about 1,938 units were launched, which is also a record low, according to OrangeTee’s Sun.
Of the 228 units sold in June, 57.9% were in the Outside Central Region (OCR), driven by sales at developments such as The LakeGarden Residences and The Botany at Dairy Farm. The LakeGarden Residences was the top-selling project of the month, moving 23 units at a median price of S$2,119 psf.
Market Outlook
Most of the other units sold in June came from the Rest of Central Region (RCR), accounting for 31.1% or 71 units, and the Core Central Region (CCR), making up 11% or 25 units. The strong performance of The LakeGarden Residences may have been influenced by the buzz around the nearby launch of Sora, creating a sense of urgency among buyers. Similarly, The Botany at Dairy Farm and Hillhaven have experienced growing buyer interest due to their proximity.
Including ECs, the total number of units sold in June was 278, up slightly from 263 units in May but down from 297 units in June 2023. The number of ECs sold in June rose by 25%, from 40 units to 50 units, with North Gaia and Lumina Grand leading the sales.
Future Developments and Price Trends
Sun from OrangeTee anticipates a surge in market activity in the second half of the year. Although launch activity will be subdued during the Lunar Seventh Month, more project launches are expected in July, early August, and October. Major projects in the pipeline include the 440-unit Sora, the 847-unit Emerald of Katong, the 366-unit Union Square Residences, the 348-unit Norwood Grand, and the 916-unit The Chuan Park.
Given the slow sales in recent months, Knight Frank’s Tay has revised his forecast for new home sales to between 4,000 and 6,000 units for the year, down from the originally anticipated 7,000 to 9,000 units. Despite this, private home prices are still expected to grow by around 3 to 5% for the full year, driven by elevated land costs and high construction costs.
Private home prices rose by 1.1% in Q2 2024, following a 1.4% increase in Q1. For the first half of the year, prices were up by 2.5%, a slower increase compared to the 3.1% growth in H1 2023.
Due to the slow sales, developers are not in a hurry to adjust prices. However, once interest rates are lowered, it is expected that buyers will rush into the market, driving a surge in transactions.
