What is the October property developers’ sales data telling us?


URA released the latest October data on prices of private residential units sold by developers. No major surprises from the headline data, but let’s put on our analysis hat and dig deeper to gather further insights from the data!

Developers’ housing stocks are clearing up at a very rapid pace

In October, developers sold some 969 new private residential homes and executive condominiums (ECs), an increase of 7 percent from September. Yes, nobody mentions that this was 37% lower than the same period last year since such a statistic is meaningless to talk about during a time when everyone is talking up the property market. (Just an interesting point for everyone to note!).

If we talk about non-landed private residential sales (i.e. excluding ECs and Landed), a total of 727 non-landed private residential units were sold during the month. But, what is probably more interesting to note (other than the headline sales figure), is that developers’ unsold inventory is clearing up at an alarmingly fast pace. Considering that there were only 242 units being launched in October, the implied take-up rate of new condo units is at 300%! This means that the monthly new units release by developers are not able to satisfy the demand of home buyers and older stocks are now selling very rapidly!

Number of unsold units have reached multi-year low

As at end of October, developers were left with only 6,670 non-landed private residential units to sell. Out of these 6,670 units, 2,296 units are from projects that have already been launched and ready for immediate purchase. There are 1,758 unreleased units from launched projects and the remaining 2,616 units (Parc Botannia included) are from future projects that have not been launched yet.

To have a better view of how the market had moved, let’s go back to the beginning of 2017. At that time, there were close to 13,000 unsold non-landed units and within a short span of 10 months, the number of unsold units has declined by half! If we go further back in time to 2015 and 2016, the number of unsold units were in the range of 15,000 to 20,000 units at any point in time. Talking about the current supply crunch? Yes, it definitely looks real.

Supply of private homes to double. So what?

My apologies for sounding too complacent in my headline. But let’s not consider this statement ‘supply of private homes to double’ at face value and try to understand in its complete picture.

On first look, this statement looks pretty worrisome but let’s not forget that this ‘doubling’ of supply is actually coming from a low base now. If we talk about supply doubling from developers’ existing unsold stock of 6,670 units, this would mean that future supply could go up to 13,000 units. Is this a major cause of concern? Not when historically our unsold inventory is around 15,000 to 20,000 units. This doubling of supply would probably bring us back to where we started at the beginning of 2017, in terms of housing supply.

What is the list of immediate future new launches telling us?

So, what are the big new launches that might happen in the near future? We have already witnessed the launch of Parc Botannia, that moved 230 units over the last weekend. Some of the other possible bigger new launches in the near future would include 1) 8 Saint Thomas (St Thomas Walk; 250 units); 2) South Beach Residences (Beach Road; 190 units); New Futura (Leonie Hill Road; 124 units); and Parksuites (Holland Grove Road; 119 units). These are projects with more than 100 units for sale.

There is one striking observation from the above statistics. There is no mass market new launches in the immediate pipeline! This is likely to create a pent-up demand and probably some of the enbloc sites might be able to catch this demand if they time their launch early.

Looks like better times ahead? Keep Calm and Carry On!

This article first featured on Singapore Property Kaki blog.

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