Singapore Residential Property

OCBC on 17 Jul 2012

URA data yesterday showed a headline total of 1,725 new private residential home sales (including 354 EC units) in Jun 12 - down 16% MoM. Excluding EC and landed-units, sales volume fell 19% MoM to 1,346 units. Units launched in Jun 12 fell a dramatic 46% MoM to 1,295 units, while the take-up rate increased to 104% from 69% last month. We saw 1,088 units sold in the OCR (Outside Central Region) in Jun 12, in part due to strong launches at the 610-unit River Isle (S$835 psf median price, 263 units sold) and the 376-unit Sea Esta (S$906 psf, 255 sold), which points to still healthy momentum in the mass-market segment. We have an OVERWEIGHT rating on the sector as we believe valuations are currently overly pessimistic and expect continued strength in the mass-market segment in FY12. Our top stock pick is CapitaLand [FV: S$3.25, BUY].

Headline sales down 16% MoM
A headline total of 1,725 new private residential homes (including 354 EC units) were sold in Jun 12 - down 16% MoM. Excluding EC and landed-units, sales volume fell 19% MoM to 1,346 units. Units launched in Jun 12 fell a dramatic 46% MoM to 1,295 units, while the take-up rate increased to 104% from 69% last month. As a result, the inventory of launched and unsold units in the market fell 1% MoM to 7,011 units.

Mass-market still posting healthy numbers
We saw 1,088 units sold in the OCR (Outside Central Region) in Jun 12, which points to still healthy momentum in the mass-market segment. OCR sales were dominated by strong launches at the 610-unit River Isle (S$835 psf median price, 263 units sold) and the 376-unit Sea Esta (S$906 psf, 255 sold). We note that developers held back high-end and mid-tier launches in Jun 12 after sluggish take-ups in the previous month, and that sales volume in these segments were subdued, particularly in the RCR (Rest of Central Region) which fell a whooping 67% MoM to only 118 units sold in Jun 12.

Overall sales momentum seen slowing in Jun 12
A significant 49% of total sales were attributed to projects newly launched in the month. Because of the boost new launches typically have on sales figures, we judge that the slowdown in momentum, particularly in the high-end and mid-tier segments, could be stronger than the headline numbers suggest. However, we note that sales volumes in the mass-market continue to hover around 1k per month, underscoring the impact of a continued highly liquid environment.

Maintain OVERWEIGHT on sector
We have an OVERWEIGHT rating on the sector as we believe valuations are currently overly pessimistic and expect continued strength in the mass-market segment in FY12. Our top stock pick is CapitaLand [FV: S$3.25, BUY].