Developers in Singapore sold 975 private homes in February, 57 per cent higher than January's take-up, as more units were launched for sale last month.
933 units were launched in February, of which 601 were in the Core Central Region, 115 in Rest of the Central Region and 217 were Outside the Central Region. In comparison, 598 units were launched for sale in January, and 596 units were released in February a year ago.
Meanwhile, the number of units sold in February last year was 455, or less than half the 975 private homes moved in February this year.
Tricia Song, Head of Research:
In recent weeks, the COVID-19 outbreak has further heaped uncertainty on the global economy and while we remain cautiously optimistic about home sales, much would depend on the economic fallout from the outbreak and whether there are large-scale job losses – widespread retrenchments, should it happen, will certainly dampen housing demand.
At this stage, we are maintaining our forecast of 9,800 units of developers’ sales for the full year 2020, with downside risks. While the COVID-19 outbreak could weigh on market sentiment, we note that the surprise rate cuts by the US Federal Reserve recently meant that interest rates would remain lower for longer, and would be supportive of housing demand. Mortgage rates based on SIBOR have come off 30-40bps since the first 50bps rate cut by Fed, and should come off further.
However, rate cuts and Quantitative Easing are no magic bullets should the global and Singapore economy descend into a recession. Unemployment rate could then rise, and we should expect demand and prices for residential property to decline. Read our analysis.
As the global coronavirus epidemic strikes at Singapore's tourism-related sectors, the staycation market is taking on newfound importance.
While the Singapore Tourism Board predicted last month that visitor arrivals could fall by up to 30 per cent this year, domestic spending could stem some of the bloodshed.
Hotels are pulling out all the stops to dangle promotions and woo domestic visitors, especially with the March school holidays now on, and the Singapore Hotel Association (SHA) lists some 100 staycation packages by members on its website.
Tang Wei Leng, Managing Director:
The COVID-19 outbreak has hurt the tourism sector and its impact deepens as countries around the world roll out travel restrictions on inbound travelers and advise against non-essential travel. We expect a steep drop in demand in the near-term; at the present occupancy rate, hotels would barely breakeven on a daily basis. Low occupancies will directly impact operation cashflow, which in our view is not sustainable. Much will also depend on hotels’ ability to hold on to rates. We are tracking this situation closely with our clients. Read our blog post on hotel sector outlook.
Singapore property auction listings could rise by 10 per cent in 2020 as more properties are put up for sale amid an uncertain environment, Colliers International said on Tuesday.
This is particularly in view of the potential economic impact should the Covid-19 outbreak become protracted, the real estate services firm said in its latest research report.
"In particular, mortgagee sales in the retail, industrial and residential sectors could increase in the second half of 2020," said Tricia Song, head of research for Singapore at Colliers International.
Steven Tan, Senior Director of Capital Markets:
We believe the higher mortgage payments due to rising interest rates during 2015-2019, coupled with a subdued residential rental market, have contributed to the increase in residential mortgagee sale listings. Personal circumstances such as loss of job or bankruptcy could also have led to higher defaults. Post cooling measures in July 2018, we think possibly more distressed owners were unable to dispose of properties quickly enough and may have defaulted on their loans.
We believe the declining success rate reflected the continued price gap between buyers and sellers. Also, we notice that only 8 out of 21 (or 38.1%) of the properties sold during auctions were transacted above their respective opening prices, indicating that buyers remained cautious during auctions and sellers are still holding onto prices. It may also be a case of buyers needing more time before taking the plunge, which resulted in some sales being done after auction sessions – these sales are not reflected in the data set under successful auction sales. Read our research report.