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December housing sales affected by seasonal lull period and property curbs. Written 17 January 2022


The last two months of the year are usually the lull period when market activities gradually wind down due to the year-end festivities. Therefore, it was not surprising that real estate developers launched and sold fewer private housing units last month. Furthermore, the government introduced a new round of market cooling measures on 16 December 2021, which also affected activities in the property market.

Primary market activities in December

Real estate developers released 383 private residential units in December 2021, which was 70% fewer than the 1,283 units released in November. No new Executive Condominium (EC) unit was released in December.

Last month, property developers sold 650 private residential units and 69 EC units, based on the latest URA figures. The private residential sales volume was 58% lower than the number of units sold in November. Compared to a year ago, developers sold 46.6% fewer private homes in December 2021.

The decline in the property sales was smaller than the decrease in the number of units launched, which indicated that there was underlying buying demand in the property market, especially in the first two weeks of the month.

Figure 1 | Non-landed residential property price indices

new home launched and sold

Market reaction after the cooling measures

The launch and sales activities in the private residential property market were reasonably active in the first half of December. But they slowed down considerably after the government introduced the latest round of cooling measures on 16 December.

The number of private housing units sold by developers dropped from 395 units sold in the first 15 days of December to 251 units from the 16th to 31st December, based on caveats lodged. A key feature of the latest property curbs was an increase in the Additional Buyer’s Stamp Duty (ABSD) for property investors, foreigners and companies. This could have caused some of the potential buyers to put their home acquisitions on hold after the new round of curbs.

Table 1 | Number of new homes sold in December 2021 before and after cooling measures

 Number of new homes sold in December 2021

However, buyers of new EC units have to adhere to HDB eligibility regulations and form household units where at least one member of the household must be a Singapore citizen. In the latest round of cooling measures, Singaporean homebuyers are again exempted from paying ABSD if they are buying their only residential property. Therefore, the sales of EC units were unaffected by the cooling measures in December.

Quarterly and annual primary market performance

Based on the latest statistics released by URA today, real estate developers released 10,548 private housing units, excluding EC, in 2021, which was 3.1% fewer units than the 10,883 units released in 2020.

However, the primary market sales jumped 31.4% to 13,118 units in 2021, which is the highest annual sales volume since 2013. This could be one of the contributing factors that prompted the government to introduce another round of cooling measures.

Table 2 | Number of new homes launched and sold (excluding EC)

Number of new homes launched and sold

However, the residential primary market property sales were already starting to slow down in the fourth quarter of 2021 (4Q 2021). Based on the preliminary figures, developers sold 3,109 private housing units in the last quarter of 2021, 12.5% fewer than the 3,550 units sold in 3Q 2021. The number of units sold in the fourth quarter was lower even though the number of housing units launched increased 8.3% quarter-on-quarter in 4Q 2021. Typically, when developers release more units for sale, the sales volume would also increase.

Therefore, even if the government did not implement a new round of property curbs last month, the primary market sales would continue to slow down in 2022. This is because the developers’ inventory of unsold housing units was declining.

Analysis & Outlook

The decline in the launch and sales activities in December was partly due to the seasonal year-end lull period and partly due to the introduction of the cooling measures on 16 December. Even before the introduction of the latest round of cooling measures, sales activities in some residential projects were gradually winding down as the decision makers look forward to a well-deserved rest.

The launch and sales activities in January and February 2022 are expected to remain subdued, partly due to the Lunar New Year when many market players would only restart their activities after the end of the festive period. At the same time, many decision makers will also be weighing the implications of the latest property market curbs.

Some private residential projects expected to be launched in January 2022 are Belgravia Ace and The Arden. Belgravia Ace is a landed housing project. The demand is expected to be healthy as many buyers of landed housing are Singapore citizens who could avoid paying the ABSD if they are buying the landed property as their only residential property.

In the coming months, the private residential property sales are expected to be lower than in the corresponding period in 2021 as there could be mismatch in expectations of buyers and sellers. Some buyers expect property prices to decline due to the cooling measures. However, as the Singapore economy and local job market are expected to continue to expand in 2022, many property sellers are unlikely to sell their properties at fire-sale prices.

Furthermore, the government plans to open up Vaccinated Travel Lane (VTL) with more countries in 2022. This will increase the arrivals of Singaporeans returning here and the arrivals of more foreigners to work, study and live in Singapore. Some of the arrivals could buy real estate in Singapore, which would increase the housing demand here.

Therefore, while the property market undergoes a price discovery process, real estate transaction volume could remain soft in the next few months. However, if the residential property were to recover after the initial shock of the latest cooling measures, housing sales could start to recover, especially in the second half of this year. Residential property prices could remain firm with a modest rate of growth. Another blogpost Buying a second property: How decoupling can help you achieve this

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