Market activity keeps humming

OVERWEIGHT – Maintained

■   Oct monthly home sales were higher by 9% mom and 41.6% yoy  
■   Buying interest remained robust amid low new launch volumes
■   Reiterate sector Overweight on valuations. Sector top picks: CIT and UOL

A rebound in Oct monthly home sales
●   Oct 21 monthly home sales came in at 1,045 units. Excluding executive condos (ECs), private home sales amounted to 909 units, up 41.6% yoy and 9% above Sep 21’s level. The best-selling projects in the month were Jervois Mansion, Normanton Park and Dairy Farm Residences. Outside Central Region (OCR) projects made up 38.2% of monthly volume transactions; projects in the city fringe (Rest of Central Region, RCR) and Core Central Region (CCR) each accounted for 30.9% of volume sales.

New home sales YTD tracking higher yoy
●   Transactions in the first 10 months of 2021 totalled 11,150 units (+33.9% yoy) and made up 93% of our full-year expectations of up to 12,000 units. Meanwhile, according to Singapore Real Estate Exchange (SRX) data, the number of estimated resale transactions was 6.3% lower mom, but 9% higher yoy, with 1,578 units changing hands.

Private home prices up qoq but at a moderated pace
●   According to the Urban Redevelopment Authority (URA) property price index, private home prices rose 1.1% qoq in 3Q21, underpinned by stronger landed homes and condo prices in the RCR locations. This translated into a 5.3% price appreciation for 9M21. In the secondary market, Oct resale home prices were up 0.7% mom and 8.2% from end-2020. With demand still brisk, we maintain our expectation that home prices will rise 5-7% in 2021F. We anticipate prices to remain supported by continued buying interest and to pace the nation’s economic recovery.

Reiterate sector Overweight
●   Developers’ valuations still look inexpensive to us, trading at a 45% discount to RNAV, close to 1 s.d. below long-term mean discount. With the residential market still enjoying brisk transaction activity, we prefer developers with visible residential projects pipelines and strong balance sheets that would enable them to tap into any opportunities during this slower cycle. Our preferred picks are CIT and UOL. Sector re-rating catalysts: good sell-through rates for new launches. Downside risks: faster-than-expected interest rate hikes, and property cooling measures that could dampen demand for housing.