New record for the monthly sales volume. The July sales volume is the highest monthly sales volume ever witnessed bringing the total number of units sold YTD to 10,139 units which is nearly three times the number of units sold during the same period last year. The price levels have increased by around 4-5% mom. We believe that the fulfillment of pent up demand, low interest rates, easing of bank lending and return of foreign participation especially Indonesians, Malaysians and Chinese nationals to be the key drivers behind the consistent increase in the developer sales volume in the recent months.
Strong demand for projects in the Mass market segment. Mass market segment witnessed the maximum number of developer sale volume during July with 1502 units representing around 54.3% of the entire units sold and around 2.5 times the number of units sold in the previous month. Mass market sales volume were mainly boosted by the sales of The Gale which managed to sell 294 units in the month of July at median price levels of S$700 psf and Meadows @ Pierce which sold around 286 units this month at a median price of S$919 psf.Mid-tier and High end segment not left far behind. Though the sales in the high end segment (-2.3% mom to 514 units) and mid tier segment (-13.4% mom to 751 units) eased a bit, the number of units sold above S$1,000 psf mark still noted a 60% mom increase in July. Nassim Park residencies managed to sell 4 units during the month of July at median price levels of S$3275. during July but the take up remained good at 135%.
Seasonal effects to kick in next month. Looking forward, we expect the developer sales to slow down during months of August and September due to seasonality effects (ghost month).Sales should return back to normal levels during the fourth quarter. However, the successful sales at the launches during early August would help support the sales volumes.The recent successful launches include Optima @TanahMerah which sold its entire units within four days at ASP of around S$850 psf, Viva which has sold nearly 85% of launched units at an ASP of S$1,500 psf, Centro Residences that sold 80% of launched units at ASP of S$1100 psf at new benchmark price levels and more recently, Madison Residences that is about 60% sold at an ASP of S$1,700 psf.
Government unlikely to take drastic measures. The recent spurt in sales has raised concerns that government might step in and take actions to prevent the heating up of the property market, but with economy still on the road to recovery and with Sub-sale levels at around 10% in 2Q09 we don’t expect any drastic measures to be taken by the government as it could hamper the growth in the economy. We expect the government to undertake more supply side initiatives such as reinstating the Land sales program of confirmed sites to inject more supply in the mass and mid tier segments. However, the impact from the supply side initiatives should be low due to the favorable demand supply dynamics in the mass and mid market segments.
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