New private home sales dive 51.7%
October's figure was due to new curbs on the reissue of options to purchase and a fall in number of new launches
Sales of new private homes by developers plunged 51.7 per cent in October from the previous month, putting the brakes on a five-month buying spree after new curbs were imposed on the reissue of options to purchase (OTPs).
Buyers took up just 642 units last month, less than half of September's more than two-year high of 1,329 units, according to figures from the Urban Redevelopment Authority (URA) yesterday.
Year on year, private home sales fell 31.1 per cent from 932 units in October last year.
The figures from the URA exclude executive condominium (EC) units, which are a public-private housing hybrid.
New rules imposed on Sept 28 by the URA restrict developers from reissuing OTPs for any unit to the same buyer within 12 months after the expiry of the earlier OTP. They are also restricted from providing upfront agreements to buyers to reissue OTPs.
The move is aimed at restricting a property market practice believed to have been inflating private home sales figures, while encouraging financial prudence in home buying amid a weak economy and uncertain employment climate.
In the past, private home buyers could make arrangements with a developer, through a property agent, to have their OTPs reissued repeatedly upon expiry, without any forfeiture of the booking fee.
This could be done for up to a year - or even as long as up to 18 months - from the date of the first OTP. The idea was to give the buyer time, for instance, to sell his existing home.
Also possibly contributing to the plunge in sales was last month's 68.4 per cent fall in the number of new private home units launched to 423, down from 1,340 in September.
If ECs are included, 682 new homes were sold last month, down 50.8 per cent from September and 28.9 per cent from a year ago, URA data showed.
Ms Christine Sun, OrangeTee & Tie's head of research and consultancy, said the new OTP curbs caused a knee-jerk reaction that resulted in a temporary fall in sales volume.
"As the property market is highly sentiment-driven, the pullback in housing demand is unsurprising. Some buyers could be waiting on the sidelines, hoping that developers will moderate prices in response to the sales decline," she said.
Mr Nicholas Mak, ERA Realty's head of research and consultancy, said the new OTP restrictions are reiterations of existing regulations rather than property cooling measures.
"Therefore, it is likely to be just a speed bump in the road to recovery from the effects of Covid-19 for the property market."
PropNex chief executive Ismail Gafoor expects sales of new homes this month and next to do better than last month, in view of upcoming launches such as The Landmark, Clavon, and Ki Residences.