Huttons' comments on URA and HDB 1Q 2020 numbers
The full pain from the Covid-19 fallout may not be fully reflected in URA 1Q 2020’s numbers.
Rents continued to edge up by 1.1% while occupancy rate improved marginally to 94.6%. This is unlikely to continue as the employment conditions in Singapore is expected to worsen in the next few quarters despite Government support.
Developers launched 2,093 units for sale and sold 2,149 units in 1Q 2020. This is the best first quarter sales result since 2017 and underscores the strong underlying demand for properties in times of uncertainty and volatility in the financial markets.
Sales in the Core Central Region is the highest since 4Q 2013. The M was the best performing project in 1Q 2020, moving more than 70% of its units during its launch weekend. The other best selling projects in 1Q 2020 are Treasure at Tampines, JadeScape, Parc Esta and Parc Clematis.
The number of unsold uncompleted units in the market declined further in 1Q 2020 to 29,149. The unsold stock has been declining since 1Q 2019 but the rate of decline is slowing. For example, unsold stock declined by 8.6% in 2Q 2019 from 1Q 2019. As of 1Q 2020, the rate of decline is 3.4%. The decline is expected to be lower in 2Q 2020 as the circuit breaker introduced by the Government will now extend to 1 June and show galleries remain closed till then.
The Government should consider allowing developers some leeway in meeting their project completion period and ABSD timeline given that Covid-19 is a totally unexpected event.
They can consider extending the project completion period and ABSD timeline and applied retrospective to all projects launched in 2018 to 2020. Developers should be relieved of liquidated damages to buyers. If project completion period is extended, this will also help buyers with their loan commitments as well.
To ease the supply situation, the Government should consider suspending the Confirmed List for 2020 and shifting all sites to the Reserve List.
Overall these measures will give some brief respite to everyone while the economy is gradually finding its footing.
For the HDB resale market, price growth came to a sudden halt in 1Q 2020 but transaction volume on a year-on-year basis is higher. This could be due to projects which obtained Temporary Occupation Permit in 4Q 2019 and 1Q 2020 and HDB upgraders needing to dispose of their HDB flat. The HDB upgraders could be more willing to lower their asking price as the time pressure to meet the ABSD timeline increases.
HDB should consider extending the 6 months period for HDB owners upgrading to an EC while the 6 months period to claim back ABSD should be reviewed as well in light of the circuit breaker measures.