This year, property developers are set to duplicate their sales records from 2007.
However, as of now the total value of new private homes is just half of that in 2007, emphasizing the difference between the two property booms.
The shift is partly due to a dramatic increase in sales of smaller, mass market units, according to a new analysis from CBRE Research.
The current total units sold from Q1 to Q3 this year is 12,828, compared to 14,811 in 2007 – thus even average sales for the final quarter of this year will be close to that of two years ago.
The total profit from the sold houses in 2007 was $23.04 billion. In comparison, total value of revenue from January until the first week of October this year was $11.2 billion, indicating a 48.6 percent difference in 2007’s record.
This is because the luxury residential market in 2007 achieved a top-line record price with units that were larger in size, said Li Hiaw Ho, Executive Director for CBRE Research.
“Unit sizes were often greater than 2,000 sq ft,” said Mr. Li, adding that much of the demands were from the luxury segment that had high prices.
Mr. Li pointed out that this year, mass market homes were designed to attract HDB upgraders. In addition, the increase in growth of smaller houses with less than 500 sq ft also helped to reduce the overall value.
Developers ensure the affordability of new homes this year as they reconfigured unit sizes to make them into smaller apartments.
“Our high-end market has not started to move. It’s the reverse of Hong Kong, where the property market picked up with the high-end segment,” said Managing Director of Cushman & Wakefield, Mr. Donald Han. “Luxury prices are generally 25 per cent below the peak of the market in the first quarter of 2008.”
Another main difference between the two growths of home sales is the number of foreign buyers in the private housing market of Singapore, said CBRE Research.
In 2007, about 1,736 foreign buyers were active in the market. Only few were mere speculators who were attracted in the country’s economic growth and the developments in real estate.
“Developers were doing a lot of road shows overseas then. We had buyers from Europe, Japan looking at huge penthouses, and the funds were buying,’ revealed Mr. Han.
However, so far this year, there are only 651 foreign home buyers, just one-third of the figure in 2007, said Mr. Li of CBRE.
Home prices earlier this year were fast and furious but its increase cooled down after the Government introduced its market-calming measures in mid-September, said Mr. Peter Ow, Knight Frank Executive Director (residential).
Some prices of new private houses are high enough to make the buyers think twice, he added.
According to Mr. Ow, the breather in the home sales boom is good as buyers need ample time to accept the current prices. In addition, home buyers must realize that low prices in the early part of 2009 are possibly gone forever.
“Developers are not in a hurry to launch in view of rising land prices. There isn’t a lot of supply coming up. While the land sales programme will have more land, it will take time for it to roll out,” Mr. Ow said.