Fewer launches drag Singapore home sales to record lows 

New home sales fell below 2,000 units in Q1 2022, the first time since 2020. 

There were significantly fewer residential units launched in Singapore in the first quarter of 2022. This was primarily due to the Chinese New Year festivities coupled with the cooling measures that took effect in December 2021. 

According to data from Savills, developers launched a mere 613 units in Q1, 73.1% lower than the 2,275 units in Q4/2021. This was the first time the number of launched units has fallen below 1,000 since Q4/2017 when 877 units were launched. On a year-on-year (YoY) basis, the number of launched units was also 83.5% lower. 

Here’s more from Savills:

While the number of launched units was relatively low across the three months in the quarter, a slight uptick was observed in March as developers restarted launching after the festive period. In terms of the breakdown of launched units by locality, the bulk, or 45.8% of the launches were in Rest of Central Region (RCR) (281 units). Around 30.5% of the launched units (187 units) were in the Outside Central Region (OCR), while the remaining 23.7% (145 units) were in Core Central Region (CCR). 

In the first quarter of 2022, each market segment witnessed a new major launch, the largest being Belgravia Ace in the OCR. Out of the 107 units in total, 85 of the units were made available for sale in the quarter. For the two other new launches, namely Ikigai (in CCR) and Royal Hallmark (in RCR), all units in the developments were launched. Apart from this, the release of more units from previously launched projects were relatively lacklustre, with only One Pearl Bank releasing another 100 units in the quarter. This was significantly lower than the five previously launched projects which each released at least 100 units in Q4/2021.

With a significant decline in the number of launched units, as well as the effects from the recalibrated cooling measures, fewer homebuyers made an appearance. Following the QoQ fall of 15.0% in Q4/2021, new home sales contracted by another 39.5% to 1,825 units in Q1/2022. This was the first time that new sales have fallen below 2,000 units since Q2/2020 when 1,713 units were sold in the quarter. The sales performance in the latter period was attributed to the imposition of the Circuit Breaker measures which prohibited home viewings. 

On a YoY basis, new sales declined by a larger 47.8% from the 3,493 units in Q1/2021. Despite the quarterly decline in new sales, the magnitude of contraction was still lower than the drop in new launches in Q1/2022. In terms of composition of new sales by market segment, as was in the previous quarter, the bulk of the new sales were in the RCR (46.9%, or 856 units). This was followed by the OCR (33.3%, or 608 units) and the CCR (19.8%, or 361 units).

Of the top five best-selling projects in Q4/2021, only one, Belgravia Ace in the OCR, was a strata landed housing development. The rest were all non-landed. For this project, of the 85 units launched in the quarter, 74 were sold, translating to a take-up rate (against number of launched units) of 87.1%. When calculated against its total of 107 units, the take-up rate was 69.2%. This is a strong performance given that the market was then trying to digest the impact of the recalibrated cooling measures. The strong demand for the units in the development may be attributed to the freehold tenure of the development, as well as limited supply of new landed housing developments. 

The price points of the strata landed homes were also widely accepted by homebuyers, ranging from nearly S$4.09 million for terrace homes to around S$4.61 million for semi-detached homes. Unit prices of the homes were between S$1,012 psf to S$1,127 psf. Other than Belgravia Ace, previously launched projects in the OCR such as The Florence Residences and Dairy Farm Residences also sold 92 and 74 units respectively. In the RCR, previously launched projects such as Normanton Park continued to sell well, with 261 units sold in the quarter.

In line with the fall in new sales volume, secondary sales also declined for the second consecutive quarter. It fell 28.3% to 3,518 units in Q1/2022. This was a larger contraction compared to the 11.3% in Q4/2021. The secondary sales volume of 3,518 units was the lowest since Q2/2020 when 951 units were sold in the secondary market.

Owing to the new round of cooling measures, while both new and secondary sales decreased in the quarter, the QoQ decline in secondary sales was lower than that of new sales. Secondary sales in all three market segments registered quarterly decreases, with the largest from CCR with a 38.3% fall to 540 units, and that of RCR and OCR fell by around 26.0% each to 974 units and 2,004 units respectively.

Based on the number of caveats lodged, there was a sharp decline in transaction volume for non-landed homes across all residency status. This could be attributed to the implementation of the recalibrated cooling measures which came into effect on 16 December 2021. With foreigners being affected most by the revised Additional Buyer’s Stamp Duty rate (ABSD) of 30%, non-landed homes purchased by this category of buyers slumped 47.8% QoQ from 278 units in Q4/2021 to 145 units in Q1/2022. This correspondingly led to the proportion of foreign purchases declining 0.7 of a percentage point (ppt) to 3.2%. 

Similarly, non-landed home purchases by Singaporeans fell 37.0% QoQ to 3,593 units in the quarter, the lowest since Q2/2020 when there were only 1,866 units transacted. Hence, the proportion of purchases by Singaporeans fell 2.3 ppts from 80.9% in Q4/2021 to 78.6% in Q1/2022.

Transaction volume of non-landed homes by Singapore Permanent Residents (PRs) fell the least by 21.7% QoQ to 829 units in the quarter, and as a proportion of non-landed sales, this was the only group of homebuyers which saw their market share rise significantly by 3.1 ppts to 18.1%, the highest since Q1/2018 when purchases by PRs constituted 19.1% of total sales volume.

Going forward, with the lifting of travel restrictions and stabilisation of the economic situation in Singapore, this may spur more PRs to acquire properties in Singapore despite the cooling measures as their ABSD rate remains at 5%.