Desperate measures: Posh condo prices slashed by 20% to buck dismal sales trend

Sales in the CCR surged by 91% in July.

Developers of high-end projects are discovering that desperate times call for desperate measures. After grappling with unsold stock for over a year, some domestic developers are beginning to employ drastic price cuts to move their luxury inventory.

According to a report by Barclays, sales in the upscale Core Central Region (CCR) surged by 91% in July after developers cut prices by as much as 20%.

“In particular, The Vermont on Cairnhill managed to clear its remaining 37 units after cutting prices by some 12% from cS$2,400psf to S$2,113psf. Hallmark Residences, off Bukit Timah Road, sold 3 units in July and sold 63% of its 75 units after bringing down selling prices by 14-20% from its initial launch price of cS$2,200psf in June 2013,” noted the report.

But sales at luxury developments launched in June, namely The Crest and Trilive, slowed even further in July. Barclays noted that total sales in these projects are only at 8% and 10% of their total available units.

Here’s more from Barclays:

After a dismal June, July's developer sales stayed flat m/m and y/y at 484 units, as compared to 482 units each in June 2014 and July 2013.

This brought year-to-July sales to 4,893 units, down 53% y/y from 10,432 units in 7M13. Take-up at the four new launches was subdued at best, especially for those that held prices at over S$1,900psf.

Sales from previous months' launches continued to slow significantly, while one high-end project sold its remaining completed inventory after cutting prices by c12%. We expect this weak trend to continue beyond August, as the traditionally quiet Hungry Ghost Festival month kicked in from 27 July.