Thursday, March 15, 2012

New Singapore private property sales and unsold units up, resale sales down in February 2012

Singapore property market is becoming a text book example of a cheap credit fuelled bubble party as February 2012 new property sales in February 2012 surged to a record 3,138 units. 725 of these were Executive Condominiums, which was the highest monthly sales for ECs since October 2010 and most probably fuelled by the 6 fold increase in second-timer quotes last month. Rest was new private properties, 2413 units, and this number was also the second only to the 2772 record of July 2009.

The main demand driver is the low mortgage names, which is constantly fuelled by central bank money printing machines of USA, China and recently Europe. Artificially low mortgage and ultra-high rental rates are making even very high priced properties temporarily “affordable” by creating a positive cash flow of rental income minus mortgage payments. The toxic low interest on deposit – high inflation environment also push people to park money in property.

Developers are racing to launch more and more project and close sales by attractive pricing which drove the sales up but also fuelled the already high number of launched but unsold units to all time high of 7586.
This numbers also fuelled the speculations that Singapore government would step in with another rounds of property cooling measures in Singapore. Singapore government has just introduced a new property cooling measure in December 2011 targeting foreigners and looking like to prevent a damaging flood of printed foreign money into Singapore but that money looks like flowing into Singapore anyway as mortgages taken by Singaporeans and Singapore PRs to buy public and private property. It increasingly looks like the only way to cool the property market is  to target the low interest rates directly, but since Singapore Central Bank, Monetary Authority of Singapore (MAS), do not use interest rates as policy tool, I do not think anyone is expecting a measure of this kind.

Singapore new property sales per month from Sep-2011 to February 2012

February 2012’s top selling projects were;

  • Parc with 380 units and average price of 994 $psf,
  • Guillemard Edge with 275 units and average price of 1215 $psf,
  • Watertown with 174 units and average price of 1260 $psf,
  • Casa Camblo with 155 units and average price of 1393 $psf.

Last month, developers launched 3,600 units (35% more than January 2012 figures) and according to Mr. Lee Sze Teck from Dennis Wee Group the strong buying interest was probably sparked by well-located projects and attractive pricing by developers. But the story was completely different in the secondary market where there seems to be a “stalemate” – a mismatch of price expectations between sellers and buyers.

Sellers, having a comfortable and long lasting holding power thanks to current positive cash-flow of rent minus mortgage payment, are probably insisting on unrealistic high prices while buyers are not “buying in” thanks to a lot of choices they have currently. Secondary private home market, which was trending down since last April, recorded only 376 caveats in January 2012, a dive from both 1012 units of December 2011 and April 2011 peak of 2,002 units.

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