Huttons’ comments on Aug developer sales numbers | Huttons Group

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Huttons’ comments on Aug developer sales numbers

The property market appeared to behave in a similar way to the stock market. Developer sales in Aug 2020 accelerated to its highest level in a year. Developer launched 1,582 units for sale and sold 1,256 units. This is 16.3% higher than July 2020 and 11.8% higher than a year ago. This is the highest sales level in 2020 and a tad shy of the peak seen in September 2019. This marks the fourth consecutive month of increase in monthly sales since the circuit breaker in April 2020.

The top five private residential projects for Aug 2020 are:

Source: URA, Huttons Research

The sales level in Aug and July 2020 were similar if it was adjusted for the sales of newly launched projects at Forett At Bukit Timah, NoMa and Mooi Residences. Hence the effects of pent-up demand may be tapering off in Aug. Nevertheless a monthly sales of around 900 to 1,000 units barring a major launch is a feat hard to match in the current economic climate.

Possible reasons for the strong set of numbers could be down to genuine buying demand generated by the low interest rate environment, lack of alternative stable investment assets and the fear of missing out.

The low interest rate environment makes it favourable for borrowers but it also makes the returns from stable assets like bonds low concurrently. Historically properties have been a stable asset class generating returns above inflation. Hence investors have switched their focus on properties.

Memories from the Global Financial Crisis and H1N1 in 2008 may be in people’s minds. Several months of strong developer sales in early 2009 was a prelude to strong price gains in 3Q 2009. Some buyers may not want to miss out the potential recovery in the property market when it happens.

Sales in the RCR were propped up by the launch of Forettt At Bukit Timah and NoMa. Adjusting for that, the sales mix were similar to July.

Comparison of Transactions in Different Segments of the Market

Source: URA, Huttons Research

Verdale, Myra and Penrose will be launched for sale in September. This will push up developer sales in September to a record high. Together with sales of 3,862 units in 1H 2020, developers are expected to sell more than 7,000 units in the first nine months of 2020 and possibly 9,000 units for the whole year. Firming sales volume may also pave the way for price increases in the months ahead.