Private Home Sales Fall By 65%: What It Might Mean For You

Ryan Ong



Every time there’s a fall in private home sales, the same thing happens. Two sides square off, and argue about whether government policy’s to blame. Both sides are covered in statistics, like they just walked past an exploding accountancy firm. Then they argue until someone concludes with “My car is bigger than yours, therefore my finance skills > yours“. I’m sick of it. Let’s talk about the practical bits instead:

How Bad Was It?

708 private homes were sold this February, down from 2,013 the previous month (Today Online)

There’s only one recent low point that beats this: That’s December 2011, when only 632 units were sold. Tellingly, both incidents happened after the announcement of new cooling measures. But despite that, most property investors aren’t convinced the new measures are a main cause.

Property investor Charlie Sng, for example, says:

Maybe there is some impact from the cooling measures, but I think that’s not the main reason. The main causes of the drop are Chinese New Year, the developers withholding launches, and the simple fact that February is short month. 

In February we had the lowest number of unit launches since, I think, 2011. Around 260 units units. In January they launched almost 1,800 units. So of course there will be a sharp drop.”


Building Under Construction
And for every three friends you refer, we’ll put in one more wall.


But I received a few contrary views. One was from a property agent, who only wanted to be known as Mark:

You cannot just compare total private home sales like that. You must compare apples to apples. So you put aside the issue of how many launches there were, and look at the take-up rates.

In January, out of 10 people we talk to, maybe 7 will buy. Last month, out of 10, maybe 5 or 6 will buy. If you isolate the issue of there being fewer launches, I think the measures are working. The new loan restrictions have knocked the wind out of investors.”

Our opinion, which we’ve already stated, is that more time’s needed. It’s still too early to make a conclusive statement about whether the cooling measures have worked. Follow us on Facebook if you want a verdict (probably in May).

In the meantime, here’s what the drop may mean for you:


1. You Can Start Snooping for Discounts


rubber stamp
Sure we absorb stamp fees. Unless the stationery shop’s closed.


Most developers and agents are expecting sales to rebound, up to the region of about 1,500 sales this month or the next. But wait… you smell that? That tangy cheeseburger-with-a-dash-of-body-odour smell?

That’s the lingering smell of fear. Developers have started dangling bigger discounts, almost as if they’re staffed by actual humans that are capable of worry. Mark says it already started in late January:

After all the cooling measures, a lot of buyers decided to play safe. Even the ones who can afford it are hesitating, waiting to see where the market’s going. 

This is a problem for developers, who need to see fast returns. They cannot afford to just sit and play a waiting game with the buyers. Now it’s been aggravated by February’s drop in sales. I expect we’ll see some seriously aggressive marketing; developers giving bigger discounts, absorbing more costs, and so forth. 

I already saw this in showrooms, as early as January. I think it will intensify. So maybe now is a good time to start making more inquiries.”

That said…


2. Don’t Expect Discounts If You Want an EC


Executive condos
Wow, the buildings there are actually getting somewhere faster.


Sales of Executive Condominiums (ECs) were barely slowed by the drop. They just kept on going, like SMRT wishes its trains would.

209 EC units were sold in February, down from 256 in January. This slight (about 19%) drop is in stark contrast to other types of housing, and suggests demand remains strong. Additionally, one of the top selling projects in February was the Topiary, an EC at Sengkang.

Charlie explains that new ECs:

“…are desired by first time home buyers, who are mostly unaffected by cooling measures anyway. Demand remains for the simple fact that this is a condo, and yet you can still get housing subsidies. Don’t expect any discounts or mercy from their developers; they don’t need to resort to such measures.”


3. We Might See a Sharp Rebound in March or April

The past few times transaction volumes fell (after cooling measures), we saw a sharp rebound. This was notable in December of 2009, and January 2012.

Hey, mindless optimism isn’t the only reason we collected half a billion in ABSD.

Charlie explains why this is:

I think the market gets cautious after new measures, so both sides back off and wait. When it’s apparent that demand remains strong, as it will because we’re land scarce, they jump back in with twice as much enthusiasm.

I think we need to wait and see. If low sales volumes persist beyond April or May, then we’re looking at prices that are finally moderated by the cooling measures. But before that, I wouldn’t base any decisions on the recent fall in sales volumes.”


4. Home Loan Interest Rates Could Rise (If This Persists)


RWS roller coaster
Well, originally, we were designing a local property market simulator…


Fewer property sales = fewer home loans. As banks notice the number of borrowers decreasing, they might try to compensate by nudging up home loan interest rates.

As is, interest has been creeping upward: From an average of 1.3% in late 2012, to about 1.6% recently. A lot of borrowers are already scrambling to lock in the low rates. And you might want to as well, if you foresee banks failing to make their quota on home loans.

(Talk to the home loan specialists on sites like MoneySmart, if you’re considering a fixed rate package).

This isn’t likely if the drop proves temporary. But if show flats continue to resemble the Sahara desert this April, expect to set aside more for that home loan.



Channel NewsAsia (

Wall Street Examiner (

Bloomberg (

Image Credits: Thant Zin Myint, ashkyd, bekathwia, alantankenghoe,

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.