Lowest sales volume in a year.
Commenting on the latest monthly Residential Developers data, Knight Frank said that new policies posed a greater impact on the residential market with developers only selling a total of 708 new private residential units (excluding Executive Condominiums) in February 2013, almost one-third the sales volume in February 2012.
"This is the lowest developers’ sales volume seen since January 2012. The previous time that sales hit a record low was in December 2011, following the fifth round of cooling measures announced on 7th December 2011 where the government introduced ABSD for the first time," said Alice Tan, Senior Manager Research at Knight Frank Singapore.
Here's the complete viewpoint from Knight Frank:
While the high developers’ sales volume of 2,013 units in January 2013 has caught the market by surprise despite the 7th round of cooling measures, the significantly lower sales volume in February 2013 has attested to the greater impact of the latest policies on overall buying sentiment.
The comprehensive set of measures has evidently dampened buying interest in the residential market, affecting both foreign and local demand. Foreigners stayed away from home purchases with significant increase in purchasing costs; while PRs are more discerning and price sensitive in the purchase of their first private home with the 5 per cent ABSD imposition. Singaporeans who have one existing property hold off their investment decisions for a second property due to the 7 per cent ABSD. Meanwhile, the majority of first-time Singaporean prospective buyers are adopting a wait-and-see approach for now to monitor price changes, before committing to buy a private home for investment or occupation purposes.
We also attribute the reduced interest to the traditionally lull period during and following the Chinese New Year festive season. Developers also held back launches with only 262 units launched in February 2013, the lowest launch volume since December 2008.
This is in line with our expectation of lower launches and sales volume compared to 2012 over the first few months in 2013, following the implementation of cooling measures.
Except for D’Leedon with 166 units sold and Q Bay Residences with 74 units sold, the top sales projects in February 2013 sold less than 50 units each.
Developers who secured land sites in the 2nd half of 2012 are likely to launch their projects during the 2Q 2013 period with enhanced marketing strategies and designs to lure home buyers. As such, we expect sales volume to recover slightly in March 2013 to 900 to 1,000 units, which would be in line with our annual projection of 12,000 to 14,000 developers’ new sale units by year end.
The increased purchasing and holding costs and lower rental yields, stemming from the recent cooling measures and new property tax policies, coupled with ample supply conditions will continue to put downward pressure on the new sale private residential market.
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