Property- Bottom in sight?

UOBKayhian on 2 Jul 2014

The Urban Redevelopment Authority’s (URA) latest flash estimates indicate private home prices fell 1.1% qoq in 2Q14, moderating from a 1.3% dip in 1Q14. Housing Development Board (HDB) data shows the correction in public housing prices also slowed to 1.3% qoq, following a 1.6% qoq decline in 1Q14.

Bottom in sight? The decline in private residential prices has moderated slightly to 1.1% qoq from 1.3% in 1Q14, bringing about a 3.2% correction from the peak. This is largely due to the mass-market (RCR) segment, which was the only segment to see the price decline slowed down to 0.6% qoq vs -3.3% in 1Q14, likely due to the smaller unit sizes which could have supported unit prices. The deceleration in the rate of fall could signal an approaching bottom for residential property prices.

While the government could start relaxing demand-side property curbs following an 8- 10% meaningful decline in property prices, the deceleration in the decline could signal an approaching bottom for residential property prices, un-warranting significant government intervention. Our preferred picks include deep value and diversified developers, such as Keppel Land, CapitaLand and Wing Tai.