By Mr Desmond Sim (沈振伦), Head of Research, Southeast Asia, CBRE
The market has surprised on the upside despite the pandemic and economic downturn woes, a sign that buyers are still actively looking for opportunities in the market. As restrictions have eased off and sales galleries have reopened after “circuit breaker” curbs, sales momentum continued to pick up in the past two months. A total of 1,090 new homes (excluding ECs) were sold in July 2020, following 998 units in June 2020.
There was an absence of major project launches in July 2020, though there were selective projects that held their previews before launching in the month after.
Deals continued to flow from balance units from prior projects, such as Treasure at Tampines (112 units), Parc Clematis (87 units), Jadescape (75 units) and Daintree Residence (56 units). Anecdotal evidence has also pointed to some developer discounts and incentives which may have helped to give buyers the final push, particularly for those who have been waiting on the side-lines. The low interest rate environment was also a key catalyst.
Interest in higher quantum units has also picked up. According to URA Realis, there were 118 transactions that were more than S$2 million in June 2020 and this has risen to 147 transactions in July 2020. There were also some large quantum deals (>S$5 million) in luxury projects such as 15 Holland Hill and Boulevard 88 in July 2020.
Performance for new launches has been considered relatively healthy in today’s climate. To date, new home sales figures for the first seven months of 2020 totalled at 4,942 units, representing a decline of 7.9% y-o-y. Buyers with liquidity are still seeking opportunities in the residential market, motivated by the low interest rate environment and increased incentives offered by developers.
That said, softer economic sentiments and weaker employment figures may affect buyer sentiments and lengthen the decision making process of buyers. The government has again narrowed its economic forecast for 2020 to a contraction between 5% and 7% from the earlier projection of a contraction of 4% and 7%. CBRE Research believes that the impact of COVID-19 is not immediate; H2 2020 could see a slowdown in sales momentum and new home sales volume may reach about 7,000 units (excluding ECs) for the whole of 2020.
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