With strong April new home sales figures reported by the Urban Redevelopment Authority last Friday, real estate agency Knight Frank reported that developers might be starting to find the “sweet spot” between pricing and location.
Alice Tan, Director and Head, Consultancy & Research at real estate firm Knight Frank Singapore, noted that April’s figures created a strong start to Q2 with both total new units launch and sales volume surpassing the 1,000-unit mark.
“This marks the first month since May 2014 that the number of new units launched crossed the 1000-unit mark,” she noted.
She added that April’s data represented a 236 percent month-on-month (m-o-m) increase in the number of units launched, and a 121.8 percent increase on a y-o-y basis.
“A total of 90.1 percent (1,211 units) of the newly-launched units were in the Outside Central Region (OCR), while about 9.1 percent of new units were launched in the Rest of Central Region (RCR). The remaining 0.8 percent of total units (11 units) launched were in the Core Central Region (CCR),“ Tan said.
Knight Frank reported that there were three newly-launches during April, of which two sold more than half of the units launched. These were North Park Residences (in Yishun) where 600 of the total 920 units were launched for sale, and 486 units (81 percent) were sold, and Botanique at Bartley (located in Serangoon) – where 400 of the 797 units were launched for sale and 254 units (63.5 percent) were sold.
Neem Tree in Novena saw none of the 24 launched units sold last month.
Tan said: “The revived response from buyers to the new sales launches can be attributed to the reasonable pricing at favourable locations near MRT stations. The median prices of units sold at North Park Residences and Botanique at Bartley were S$1,374 per sq ft and S$1,290 per sq ft respectively.”
She continued: “Buyers remain price sensitive, and achieving a sweet spot price quantum is key. They are attracted by properties that offer a strong value proposition and good locations. Raising prices at this point would face with resistance and lukewarm responses from buyers.”
She noted that looking forward, new sales of properties close to Jurong Gateway are expected to be propped up by the recent announcement in the location of the highly anticipated Kuala Lumpur-Singapore high-speed rail terminus, given the recent announcement of its location at the current Jurong Country Club.
“New units are expected to be rolled out in projects situated within the vicinity of the terminus as developers look to capitalise on the positive developments in the area. Examples of such projects include Waterfront @ Faber (30 units not yet launched) and Lakeville (246 units not yet launched), both of which are located about two kilometres from the upcoming terminus,” she predicted.
Amid the muted market conditions, Tan said that potential home-buyers could still be adopting a “wait-and-see” approach in anticipation of further price corrections. Some investors might take a more cautious stance towards their purchasing decisions in view of potential further weakening in the leasing market. Probable interest rate hikes could affect home buying sentiment.
“Looking ahead, new sales volume in Q2 2015 is expected to be considerably higher than that of the 1,189 units sold during the first quarter. Total developers’ sales volume for Q2 2015 is forecast to range between 1,700 and 2,200 units, Tan concluded.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
