Buyers’ fatigue, Hungry Ghost month send new private home sales down 72% in August

Affordability is now a growing concern for homebuyers since the escalation of interest rates from the second half of 2022. PHOTO: ST FILE

SINGAPORE – Buyers’ fatigue following a flurry of new private residential launches in recent months, coupled with the start of the Hungry Ghost month in mid-August, sent new private home sales plunging 72.1 per cent to 394 units last month from a 20-month high of 1,412 units in July.

Analysts noted that buyers are turning cautious in the face of higher interest rates, slowing private home prices following three rounds of property cooling measures and a souring economic outlook.

This was the third-lowest monthly private home sales so far in 2023, with 68 per cent of new homes sold in the first half of August before the start of the Hungry Ghost month on Aug 16, CBRE’s head of research for South-east Asia Tricia Song noted.

“Sentiment has clearly deteriorated with higher interest rates, softer economic prospects” and the cooling measures since December 2021, she added.

The number of units launched plunged 72.6 per cent to just 590 in August from 2,156 in July, but is up 340 per cent from a year ago, according to data released by the Urban Redevelopment Authority on Monday.

New private home sales excluding executive condominiums (ECs) were down 10 per cent from a year ago. Including ECs, August’s sales dropped nearly 56 per cent to 649 units, from 1,471 in July, but are up 44.5 per cent from 449 a year ago.

“The stellar sales in July were a tough act to follow in August, which coincided with the start of the Hungry Ghost month – a period when activity tends to slow due to fewer launches,” said Ms Wong Siew Ying, PropNex’s head of research and content.

“As more new projects come on, we expect buyers to return to some previously launched projects, should they perceive those units as offering more value,” she added.

Earlier launches such as Liv @ MB sold 13 units in July and 12 units in August – the only months to post double-digit sales since the project was launched in May 2022.

One Bernam’s 13 transactions in August were the highest in six months since it hit the market in May 2021, Ms Wong noted.

Affordability is now a growing concern for home buyers since the escalation of interest rates from the second half of 2022, coupled with higher private home prices and more public housing options or Build-To-Order launches in good locations, said Knight Frank Singapore’s head of research Leonard Tay.

In August, EC launches outperformed private new launches, with Altura EC in Bukit Batok West Avenue 8 selling 63 per cent or 225 units in its launch month, analysts say.

The project was well received because there has not been an EC launch in Bukit Batok in over two decades and buyers are given upfront remission on additional buyer’s stamp duty (ABSD), which has been raised twice since December 2021 to 20 per cent for a second residential property, Huttons Asia senior research director Lee Sze Teck said.

“Buyers appreciated the quality finishes and facilities in Altura, which are comparable to private homes but at a more affordable price,” he added.

With EC projects doing well, developers are likely to remain active in government land sales tenders for such sites, Ms Wong said.

“Tenet in Tampines sold its final unit in August, and unsold new EC supply is now mostly at North Gaia in Yishun Close and Altura.

“Given that the next new EC may come on only in 2024, we expect North Gaia and Altura to continue to pare down unsold inventory,” she said.

In comparison, four new private condo launches – The LakeGarden Residences and The Arden in the suburbs, TMW Maxwell in the city fringe, and Orchard Sophia in the prime district – sold just 133 units in total in August, Ms Song said.

The 105-unit Arden sold 30 units at a median price of $1,777 per sq ft (psf), while the 78-unit Orchard Sophia sold 24 units at a median price of $2,808 psf. The 324-unit TMW Maxwell, near the Central Business District, sold six units at a median price of $3,338 psf, she added.

“We believe the pent-up demand has been mostly absorbed, and genuine buyers are now spoilt for choice. In addition, prices have moved up significantly and investors may feel that there is limited room for upside.

“Some projects that are targeted at investors or foreign buyers will face some resistance after the ABSD rate for foreigners was doubled to 60 per cent,” she said.

Mr Eugene Lim, ERA’s key executive officer, said there are signs of “buyers’ fatigue”, given that the number of new units launched in the first eight months of 2023 has more than doubled from the same period a year ago.

“Developers have launched eight private new sale projects and one EC project between July and August 2023, totalling more than 3,000 units islandwide. And there are 13 more projects set to launch by the end of this year,” he added.

Mr Nicholas Mak, chief research officer at Mogul.sg, said two upcoming launches – Hillock Green in Lentor and J’den Residences, to be built on the site of the former JCube in Jurong East – “should inject some excitement in the market”.

“Residential launches around the busy Jurong East MRT station are few and far between. They are usually highly sought after by investors,” he said.

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