S’pore home sales surge amid apartment glut

Bloomberg

Sales of private apartments in Singapore rebounded in November amid concerns a property glut could halt a nascent price recovery.
Developers in the city-state sold 1,147 units last month versus 931 dwellings in October, urban redevelopment authority data released on Monday showed. The 23% gain came despite fewer apartment launches; home builders launched 740 apartments for sale last month compared with 892 in October.
The jump in transactions comes as Singapore grapples with an oversupply of almost 32,000 apartments — some finished, others under construction and still more in the planning phase. The glut, which threatens to push down prices, has prompted home builders to call for an easing of cooling measures imposed in July 2018 to absorb the backlog. Some market watchers say that could take as many as four years to clear.
So far at least, the city-state’s private property market has shown resilience with home prices rising 1.3% in the three months ended on Sepember 30.
The supply overhang could be eased should the sales momentum continue. The market isn’t experiencing launch fatigue because buyers are still attracted to projects that offer reasonably high value propositions, analysts said.
The uptick in sales followed the release of anticipated property launches, such as One Holland Village Residences. Located in a prime district, about one-third of the 296-unit project has been sold following its launch late November.
The uncertain economic outlook next year could nudge developers to price projects “more sensitively” if they want to move sales as they race to beat a five-year deadline to sell all units or face stiff penalties, said Christine Li, head of research for Singapore and Southeast Asia at Cushman & Wakefield Plc. Prices are expected to rise up to 3% next year “barring unforeseen circumstances,” Li added
The healthy sales volume could potentially ease the glut, said Christine Sun, the head of research and consultancy at OrangeTee & Tie Pte.
With US and China reaching a phase-one trade agreement in principle, this could de-escalate trade tensions and boost market confidence, Sun added
“We anticipate that the next wave of inbound capital may continue to enter Singapore’s property market next year with more Chinese capital flowing south,” Sun said. She added that with mortgage rates remaining low or going even lower, it could help housing demand to “cruise” at current levels.