Sales drop sharply in February for new private homes; Chinese New Year lull and supply issues likely causes, analysts say

A view of the prime district area around Orchard Road with hotels and residential housing

Updated from : Today Online, 16 Mar 2021

The sales of new private homes fell in February compared with the month before, which experts attribute to a lower supply due to the Chinese New Year. Developers typically hold back on launches of private residential projects in anticipation of slower property transactions during the festive period.

The latest data released on Monday (March 15) by the Urban Redevelopment Authority (URA) showed that 645 new private residential properties were sold in February, a 60.5 per cent decline from the 1,632 sold in January. This figure excludes executive condominiums, which are public-private housing hybrids built by private developers.

When compared with February last year when 976 units were sold, this represents a 33.9 per cent drop. 

Some property analysts said that the low volume of units launched was due to a wariness of any potential cooling measures that the Government may impose. 

Only 167 units were launched in February compared with 2,600 in the previous month. 

Talk has been rife on the Government imposing property curbs, since private property prices have consistently bucked the trend, with URA’s price index registering increases even though Singapore’s economy went through its deepest economic recession due to the Covid-19 pandemic. 

Over the whole of last year, private property prices rose 2.2 per cent, while the economy contracted 5.8 per cent based on flash data from the Ministry of Trade and Industry. 

Deputy Prime Minister Heng Swee Keat had said in January that the Government was paying close attention to the property market to ensure that it remained stable. In an interview with news agency Bloomberg a month later, he had warned that the current low interest rate environment could lead to distortions in asset prices. 

Ms Christine Sun, senior vice-president of research and analytics at property agency OrangeTee, said that the property market turned cautious on the back of these comments. 

“Both consumers and developers took heed of the Government’s advice to exercise greater prudence in light of the current macroeconomic uncertainties. Developers and home buyers were told to be wary of the euphoria in the property market and were warned that the Government may step in if the market overheats,” she said. 

Independent property analyst Ong Kah Seng, who has been in the property field for 17 years, echoed similar sentiments. 

He said that developers will strive to keep prices in the first half of this year at a similar level to the fourth quarter of last year in a bid to prevent new cooling measures from being implemented. 

“Developers will continually adopt competitive pricing strategies, even as demand was buoyant in Phase Three (of Singapore’s economy reopening), which offers high potential for economic recovery,” he said. 

Other analysts offered different reasons for the drop in supply of new units. 

Mr Nicholas Mak, head of research and consultancy at property agency ERA, said that the low number of units launched in February was because developers had already released more units in the three-month period between November 2020 and January 2021 than the market is able to absorb. 

Developers launched 5,324 units during this period, which is almost half of the 10,883 units launched for the whole of 2020. That was why developers needed to space out their launches to give the market some time to absorb the newly launched units. 

“Although the Government had given veiled warnings about possible new cooling measures, the thought that developers and buyers would take heed of the Government’s advice to exercise greater prudence is simply wishful thinking. Each developer and property buyer would act according to their best interests,” Mr Mak added.