January new home sales rebounds 130%, buoying confidence for upcoming new launches

SINGAPORE – New homes sale shows a rebound in January 2023 as developer sales (excluding executive condos (ECs) jumped 130% month-on-month to 391 units from just 170 units sold in December 2022, according to PropNex Realty.

The majority of new units sold last month is attributed to the launch of the 268-unit Sceneca Residence at Tanah Merah Kechil Link, which was the first new project to launch this year. This project sold 157 units at a median psf of $2,083 psf, and accounts for 40.2% of January’s new home sales figures.

“The good sales take-up shows a pent-up demand for housing units, especially in the suburbs where supply remains tight. This is despite the high interest rates and cooling measures implemented in September 2022,” says Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.

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“The healthy sales launch at Sceneca Residence in January could set the tone for major launches to come and it bodes well for new private home sales this year,” says Wong Siew Ying, head of research and content at PropNex Realty.

She explains that purchasing new homes from developers under the progressive payment scheme, buyers may feel less pressure in this high-interest rate environment. This is because the mortgage payment will rise gradually in tandem with the construction milestones.

According to Lee Sze Teck, senior director of research at Huttons Asia, the opening up of international travel by China last month saw the return of high-net-worth property buyers and investors to Singapore’s property market.

“The super wealthy Chinese are behind some of the purchases in Klimt Cairnhill in January, pushing the project to become the number three bestselling project last month. Fourteen out of 17 units at Klimt Cairnhill were sold to foreigners (in January 2023),” says Lee.

The government unveiled an adjustment to the buyer’s stamp duty (BSD) as part of Budget 2023, introducing a more progressive tax regime. This will likely “add to the climate of tentativeness in the private residential market. This does not mean that there are no buyers”, says Leonard Tay, head of research at Knight Frank Singapore.

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He believes that the knee-jerk reaction will cause most buyers to pause and re-evaluate the increased costs associated with acquiring a private home in a period of uncertainty. “However, once there are more launches (later this year) to ignite the appetite of home buyers, transaction volume will return. Home buyers in Singapore have become accustomed to the regular announcement of varied government measures and tax changes,” says Tay.
Tricia Song, head of research, Southeast Asia, CBRE, also foresees a near-term slowdown in new home sales. “Demand remains uncertain in the near term amid the combination of slowing economic conditions, high mortgage rates and tightened financing conditions from September 2022’s round of cooling measures. In addition, the higher BSD announced in Singapore’s Budget 2023 could potentially undermine some home buying appetite, especially for the higher-end properties,” she says.

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