• 1,256 new homes were sold in August 2020, the highest since September 2019
• Pent-up demand, condominiums seen as a safe asset, were among the reasons for brisk sales
• Domestic and foreign demand for new homes increased
• Strong buying momentum expected to continue, analysts said

SINGAPORE — Defying an ongoing recession and lacklustre expectations during the Hungry Ghost Festival on the Chinese lunar calendar, private residential sales in August soared for the fourth consecutive month to reach their highest level since last September.

Excluding executive condominiums (ECs), a total of 1,256 new homes were sold in August, an 11.8 per cent jump from the 1,123 sold in the same month last year. This was from data released by the Urban Redevelopment Authority (URA) on Tuesday (Sept 15).

The number of units sold was also a 16.3 per cent increase from the 1,080 sold in July. Singapore had entered Phase Two of its reopening on June 19 after a shutdown of activities due to Covid-19 in April and May, with showflats shuttered during that circuit breaker period.

WHY ARE HOME SALES SOARING?

The brisk sales were the best August performance in the past three years, with analysts attributing the dazzling numbers to pent-up demand after the circuit breaker ended in June.

The perception of real estate as a “safe haven” asset as well as record low interest rates could have also led some people to seek shelter in property purchases, some analysts said.

Explaining why there is pent-up demand, property analyst Ong Kah Seng said that the surge in sales in the past three months showed that buyers were more eager this time to “close the deal”, since Covid-19 measures require appointments to be made before a potential buyer visits a showflat.

ERA Realty's head of research and consultancy Nicholas Mak said that even though buyers traditionally avoided buying real estate during the month of the Hungry Ghost Festival, the home-buying momentum from the previous months had continued.

“It appears that the Hungry Ghosts are no match for the hungry homebuyers,” he said.

SALES OUTPERFORMED PAST CRISES

Sales had “outperformed” previous crises and periods when property cooling measures were implemented, noted OrangeTee and Tie's head of research Christine Sun:

• In August 2008, during the global financial crisis, 325 new homes were sold

• After fresh rounds of cooling measures were implemented, 756 units were sold in August 2013 and 617 units in August 2018

The strong demand for real estate could also have been fuelled by rising economic uncertainties and volatile equity markets, Ms Sun said.

“Investors have the tendency to move away from cash holdings and riskier investments towards property assets for wealth preservation. Moreover, record-low interest rates are stoking the property market’s recovery as mortgages are now increasingly affordable for both owner-occupiers and property investors,” she added.

PropNex's chief executive officer Ismail Gafoor said that Singapore’s effective management of the Covid-19 situation and the gradual reopening of the economy likely lifted confidence among buyers.

“Amid the uncertainty, perhaps buyers see real estate as a stable form of investment compared with the more volatile financial markets,” he added.

Mr Mak of ERA noted that the investment horizon of most homebuyers are typically three years or more. Given this, some buyers believe that real estate prices will rise when the Covid-19 outbreak is contained, he said.

PropNex’s head of research and content Wong Siew Ying said that another reason for the increased sales was the 1,582 units launched in August, which was a sharp 82 per cent increase from July. This gave buyers more options to pick from, she said.

WHO IS BUYING THESE UNITS?

Out of all 1,240 new non-landed home sales in August, Singaporeans formed the bulk of the purchases with 1,047 sales inked — the highest since July 2018, URA's transaction data showed.

The number of new non-landed homes bought by Singapore permanent residents also rose to a two-year high with 139 transactions, while purchases by non-permanent residents hit a seven-month high with 54 units snapped up last month.

Ms Sun from OrangeTee and Tie said: “The property market is currently buoyed by strong domestic demand. Foreign buyers seen returning to the market have also kicked the upturn into higher gear last month.”

Noting that the number of transactions from foreign buyers rose by 74 per cent — from 31 in July to 54 in August, Mr Ismail of Propnex said that further recovery of foreign demand in private homes will be “slow and measured” with the gradual reopening of the economy and the setting up of fast lanes for essential travel.

With more major condominium projects slated to be launched this month, analysts expect the outlook to remain positive.

Mr Mak said: “Developers had reportedly sold 6,198 private housing units in the first eight months of this year. As long as sentiment in the real estate market remains buoyant, the primary market sales this year could range between 9,000 and 10,000 units — about the same in 2019, before Covid-19 and coronavirus became household words.”