Real estate developers released and sold more private and Executive Condominium (EC) housing units in January 2021 as the year-end festivities drew to a close. Furthermore, the concerns of more property market curbs from the government had also driven more homebuyers into the property market

Government’s warning of cooling measures spurred more launches

The number of private housing units, excluding Executive Condominium (EC), launched for sale had increased steadily from November 2020 to January 2021 on a year-on-year basis. In January 2021, real estate developers launched 2,600 private residential units in Singapore for sale, which was 334.8% more than the same period in 2020. This was after a 264.6% year-on-year (yoy) increase in the number of units launched in December 2020.

There has been growing speculation that the government could introduce new property market cooling measures in the face of the robust homebuying demand in recent months. In January this year, both the Deputy Prime Minister and National Development Minister gave veiled warnings of more government intervention in the real estate market. The high number of housing units launched in the past month could be a respond to such warnings as developers rushed to release their unsold housing units before additional market curbs were introduced.

As more housing units were launched, the number of units sold by developers also increased. Hence, the government’s warning actually heated up the market in the short term.

Let’s take a look at the private residential property market launch volume :

Date Units Launched %yoy Change
Jun-2020 597 -10.9%
Jul-2020 869 -4.6%
Aug-2020 1,582 55.9%
Sep-2020 1,340 -21.8%
Oct-2020 423 -53.5%
Nov-2020 1,375 45.2%
Dec-2020 1,349 264.6%
Jan-2021 2,600 334.8%
Source : URA, ERA Research & Consultancy

More units sold but at a slower pace

The number of private housing units (excluding EC) sold in the primary market also increased about2.46 times from 654 units in October 2020  to 1,609 units last month. Over the same period, thenumber of private housing units released expanded 6.15 times, illustrating that  sales grew at aslower pace compared to the growth rate of the launch volume.
DateUnits SOLD%yoy Change
From November 2020 to January 2021, the rate of growth of the number of private residential units sold each month was slower than the number of units released for sale. Although the number of units sold in December 2020 and January 2021 increased by more than 100% yoy in each month, the number of units launched jumped by more than 200% yoy in the same two months. Therefore, the rate of growth of developers’ sales was less than half of that of the units launched in the past two months. In other words, demand was not keeping pace with supply.

Impressive Sales at new project launches

Two giant housing projects were launched in January.  The 1,862-unit  Normanton Park is the largest residential project and Parc Central Residences is the largest EC project expected to be launched in this and next year. Let’s look at the new residential launches in January 2021 :
Project Name Property Type Locality Total Units Units Sold in Jan Median $psf
Normanton Park Condo RCR 1,862 625 $1,763
Parc Central Residences Exec Condo OCR 700 417 $1,177
The Reef at King’s Dock Condo RCR 429 221 $2,276

One-third of  the  1,862  units at  Normanton Park were sold at  the median price of $1,763 psf in January.  Over at Parc Central Residences and The Reef at King’s Dock, over half of the total number of units in each development were sold in January at the median prices of $1,177 psf and $2,276 psf , respectively.

The impressive rate of sales in these three new launches was partly due to lack of new privateresidential launches in each respective location in recent years.  In addition, the threat of more property market cooling measures had also contributed to the urgency among some buyers to clinch their home purchases.

Market Outlook

As private housing supply outpaced demand in recent months, the take-up rate as measured by the ratio of units sold to the number of units launched in each month had remained below parity in November 2020 to January  2021.   As a  result,  the number of  private housing units launched and unsold had grown steadily from  a trough of 4,833 units in July 2020  to 7,226 units last month.

Date Private Housing Take-Up Rate
Aug-2020 79.5%
Sep-2020 99.2%
Oct-2020 154.6%
Nov-2020 56.3%
Dec-2020 90.2%
Jan-2021 61.9%

The slower absorption rate  indicates that the local private residential property market is not overheated. In addition, the private housing price index increased 2.2% yoy in 2020, a fraction of the 9.1% y-o-y price expansion in 2Q 2018 before the authorities introduced the most recent cooling measures in July 2018.

If the government were to  introduce more cooling measures this year to curb housing demand, it would heighten the risk of an  oversupply of  private and EC housing units, which in turn would lead to negative impact on other sectors in the economy, such as the banking, finance and construction industries.