New private home sales plunge 51.7% in October after clampdown on options to purchase

SINGAPORE – Sales of new private homes by developers were more than halved in October from the previous month, putting the brakes on a five-month-long buying spree after new curbs were imposed on the re-issue of options to purchase (OTPs).

Buyers took up just 642 units in October, down 51.7 per cent from an over-two-year high of 1,329 units in September, according to figures from the Urban Redevelopment Authority (URA) on Monday (Nov 16).

Year on year, private home sales fell 31.1 per cent from 932 units in October last year.

The figures from the URA on Monday (Nov 16) exclude executive condominium (EC) units, which are a public-private housing hybrid.

New rules imposed on Sept 28 by the URA restricted developers from re-issuing OTPs to the same buyer of the same unit within 12 months after the expiry of the earlier OTP.

They are also restricted from providing upfront agreements to buyers to re-issue 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 Covid-19 economic slump and uncertain employment climate.

The re-issuing of OTPs refers to an arrangement some private home buyers make with a developer, via a property agent, to continually re-issue OTPs upon expiry – without any forfeiture of the booking fee.

In the past, 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.

The plunge in sales could also be attributed to the sharp fall in new units up for booking.

The number of new private home units launched sank 68.4 per cent to 423 in October, down from 1,340 in September. This was lower even than the number of units launched during the circuit breaker months of April (640 units) and May (615 units), and was the lowest since December last year. Last month, there was only one new project launch – the 319-unit Hyll on Holland.

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Huttons Asia’s director of research Lee Sze Teck said that buyers had waited last month to see if developers would adjust their prices.

“This group of buyers belong to those who do not need an extension of the option to purchase but nevertheless held back their purchase to observe. Developers on the other hand did not have plans for major launches in October,” said Mr Lee.

He noted that The Linq @ Beauty World sold more than 96 per cent of its units on the first day of its launch over the past weekend. “The sales were across all unit types and further proved that there are many buyers in the market who do not require re-issue of options.”

The top selling project last month was The Garden Residences in Serangoon North, which shifted 53 units at a median price of $1,612 psf, according to Huttons Asia research.

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