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New Singapore private home sales surge to 998 in June, more than double May's volume

Tue, 21 Jul 2020 15:58:09 GMT

New Singapore private home sales surge to 998 in June, more than double May's volume

DEVELOPERS in Singapore sold 998 new private homes in June, 105 per cent more than May's 486, on pent-up demand and an increase in foreign buying as show galleries reopened.

Despite the surge, buyers are choosing to remain prudent, with affordable homes making up over 90 per cent of units sold.

The transactions in June were the highest sales for the month in seven years, while the number of foreign buyers rose to the highest in 10 months, according to Christine Sun, OrangeTee & Tie's head of research & consultancy.

The previous June high was in 2013 with 1,806 units.

The 105 per cent jump in June from May was also higher than the 75.5 per cent month-on-month (m-o-m) increase seen in May, data from the Urban Redevelopment Authority (URA) showed on Wednesday.

June's 998 sales were also 22 per cent higher than the 821 units transacted a year ago.

Typically, June is slow because it's the month-long mid-year school break when families vacation overseas but this year was the first time that people could not travel due to Covid-19 restrictions. The usual mid-year holiday period was moved to May because of the "circuit breaker", with schools reopening in June.

Last month saw 169 purchases by foreigners, made up of 120 permanent residents (PRs) and 49 non-PRs, said Ms Sun, who crunched the data. The previous high was in August 2019 with 188 foreign buyers.

The economy reopened last month in phases, with show galleries welcoming back visitors on June 19 with social-distancing measures.

The lockdown or "circuit breaker" lasted from April 7 to June 1.

On the increase in the number of foreign buyers, Ms Sun said many foreigners bought properties last month as the growing macro-economic uncertainties have driven overseas investors to seek shelter for safe-haven assets in the Republic.

"Although showflats reopened last month, we have observed more foreign buyers purchasing private homes remotely due to the border lockdowns or travel restrictions imposed in many countries. This is in stark contrast to the past where many foreigners typically buy a unit only after visiting a showflat," she said.

"Currently, many foreigners snap up homes in Singapore based on their trust in our legal system, quality of finishes, and investment potential of properties.

"We may expect more foreigners to pick up private homes in the coming months as interest rates are expected to remain low and ample liquidity is flowing into the asset markets due to the massive quantitative-easing programmes launched around the world," Ms Sun added.

Buyers remained largely prudent though, with 919 affordable homes sold out of the total 998 transactions - comprising 489 in outside central region (OCR), and 430 in rest of central region (RCR). There were 79 units in the posh core central region (CCR).

In May, sales for OCR, RCR and CCR were 256, 189, and 41 respectively.

Source: Business Times 15 July 2020

Singapore new home sales jump 105% in June as showflats reopen after COVID-19 circuit breaker

Wed, 15 Jul 2020 14:43:00 GMT

SINGAPORE: Sales of new private homes more than doubled in June after showflats reopened following an almost two-month long COVID-19 “circuit breaker” period, in what analysts said indicate firm underlying demand for affordable properties.

Developers sold 998 units - excluding executive condominiums (EC) - in June, an increase of 105 per cent compared with the 487 units sold in May, according to data from the Urban Redevelopment Authority (URA) on Wednesday (Jul 15). Compared with the 821 units transacted in June 2019, last month's sales were 21.6 per cent higher.

Singapore implemented a circuit breaker period on Apr 7 to contain the spread of COVID-19, allowing only essential services such as healthcare, transport, logistics and food and beverage to continue operations.

During that period, showroom viewings - a core marketing activity for property developers - were halted and potential buyers had to view the units virtually.

HIGHEST SALES FIGURE FOR JUNE SINCE 2013

June’s transactions represent the highest monthly sales since November 2019, when 1,165 new private homes were sold. It is also the highest figure for the month of June since 2013's 1,806 units, analysts said.

"The easing of circuit breaker measures and reopening of showflats from Jun 19 was a major contributor to new home sales surging," said Mr Ong Teck Hui, senior director of research and Consultancy at JLL.

"(That) seem to have unleashed pent-up demand by buyers, suggesting that the private home market remains fairly resilient in spite of the COVID-19 outbreak and the recession," he added.

Including ECs, developers sold 1,031 units in June, up 102 per cent from May.

A "BUYER'S MARKET"

Singapore entered the first phase of its post-circuit breaker reopening on Jun 2, and is currently in Phase 2, which started on Jun 19.

With this, consumers are aware it is a “buyer’s market”, said Mr Ismail Gafoor, CEO of PropNex.

“As the economy reopens, we are seeing buyers coming back to take up units – cognisant of the fact that it is a buyer’s market and that units are more attractively priced.

“Amid concerns about the economic downturn and jobs, there are still genuine buyers out there - with ample liquidity - who are taking advantage of the low interest rates to purchase well-priced units.”

In total, developers released 597 units in June – down 2.9 per cent from the 615 units launched in May and 10.9 per cent from the 670 units in June last year. There were no new ECs launched in June.

Sales were largely driven by mass market homes in the Outside Central Region (OCR), where developers sold 489 units. This was followed by 430 homes in the Rest of Central Region (RCR) and 79 units in the Core Central Region (CCR).

“Projects such as Treasure At Tampines, Parc Clematis, and The Florence Residences continued to move units at a steady clip, owing to their sensitive pricing,” said Mr Gafoor.

“These three projects accounted for over 28 per cent of the total sales in June and were among the top 10 best-selling private residential projects last month,” he added.

Mr Leonard Tay, head of research at Knight Frank Singapore, said June's transactions indicate the resilience of Singapore's property market.

“The modest overall price decrease as well as the encouraging demand volume seen in June, all point to an underlying resilience in the private residential market that could motivate developers to launch new projects in the remaining half of 2020,” he said.

"To maintain the momentum registered in June, developers might also provide sweeteners in the form of selective discounts to ride on the current nascent rebound," he added.

FOREIGN BUYERS

Ms Christine Sun, head of research and consultancy at OrangeTee, said that while the jump in June's sales figures was broad-based across all market segments, she noticed a substantial increase in the number of foreign buyers and pricier homes being sold.

"The number of private homes excluding ECs transacting at S$2 million and above rose from 23 units in May to 129 units in June," she said.

She added that 49 non-landed private homes were bought by non-permanent residents in June, up from the 14 units transacted in May and seven units in April.

“Many foreigners bought properties last month as the growing macro-economic uncertainties have driven more overseas investors to seek shelter for safe-haven assets here,” said Ms Sun, citing their trust in Singapore's legal system and the quality and investment potential of properties.

“We may expect more foreigners to pick up private homes in the coming months as the interest rates are expected to remain low and ample liquidity is flowing into the asset markets due to the massive quantitative easing programmes launched around the world," she added.

Property analyst Ong Kah Seng added that with the General Election now over, Singapore could potentially see more wealthy buyers willing to pay a "special price premium" for properties they favour.

"Wealthy foreigners have always appreciated political stability in Singapore, comparative with theirs back in their country," he said.

2020 COULD STILL SEE OVERALL LOWER SALES

Despite the recent uptrend, transactions this year could still end lower than in 2019, said Knight Frank's Mr Tay.

Singapore reported on Tuesday that its economy contracted 41.2 per cent in the second quarter from the previous three months, taking it into a technical recession.

Mr Tay expects new private home sales to range between 6,000 and 7,000, down 28 per cent to 38 per cent from the 9,734 units transacted last year.

What is an Option to Purchase (OTP) agreement?

Thu, 27 Jun 2019 11:26:00 GMT

An Option to Purchase agreement is a legal contract signed between a buyer and seller of a residential property, and basically gives a buyer the exclusive rights to purchase a property from a seller in the future.

Whether if you’re buying a new property or a resale HDB, one common term that you probably hear often is OTP, or Option to Purchase.

In Singapore, an Option to Purchase is one of the first few steps of buying a property, and comes before the sales and purchase agreement.

But what exactly is an Option to Purchase?

In this article, you’ll learn what an Option to Purchase agreement is about.

What is an Option to Purchase agreement?

An Option to Purchase agreement is a legal contract signed between a buyer and seller of a residential property, and basically gives a buyer the exclusive rights to purchase a property from a seller in the future.

To “reserve” the property from the seller, the buyer must first pay a small booking deposit, also known as the option fee.

In exchange, the seller cannot sell the property to another third party for a fixed period, or known as the option period, and must adhere to the pre-agreed sale price and terms.

In order to make the Option to Purchase agreement as complete as possible, the seller can hire a property lawyer to draft the document out before sending it to the buyer.

Then, the buyer can also hire a lawyer to review the terms and make changes before signing.

Buyers and sellers of HDB resale flats, however, must use the Option to Purchase document specified by the HDB, which you can download here .

Note: Bear in mind that the buyer isn’t obliged to buy the property from the seller after signing an OTP agreement; rather, the buyer can contemplate whether to purchase the property while exploring other options.

When is the Option to Purchase agreement signed?

Typically, the sequence is like this:

Before the contract is signed, the buyer can request for a property inspection to ensure that everything is in tip-top condition.

Likewise, the seller can also request to view the buyer’s bank loan approval letters if there’s a bank loan involved.

For HDB resales , both the buyer and seller must register their intent to buy and sell on HDB’s portal before obtaining the OTP.

The buyer also has to secure the HDB housing loan first as the OTP can only be issued when there’s a valid HDB Loan Eligibility (HLE) letter from HDB.

Once that’s done, both parties must declare the selling price to HDB, agree on the terms, and sign the OTP agreement.

What are the typical terms included in an Option to Purchase agreement?

While there isn’t any one-size-fits-all OTP agreement, it should typically cover these basic things:

Is the option fee refundable?

The option fee is usually non-refundable , so if the agreement expires, the seller will keep the option fee and is free to offer the property to someone else.

What if the buyer chooses the exercise the Option to Purchase?

If the buyer decides to exercise the Option to Purchase agreement, both parties will enter a sales and purchase agreement , and follow the terms set by the Law’s Society Conditions of 2012 , which include terms like rents, profits, levies, and stamp duty.

For more helpful guides like this, check out PropertyGuru.com.sg .

Victor Kang, Digital Content Specialist at PropertyGuru, wrote this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg