A slower Dec

■ Dec monthly home sales fell 58% mom and was 47% lower yoy following the property cooling measures announced in Dec, and absence of big launches.
■ Volume transactions rose 29.4% yoy to 13,3489 units in 2021 while private home prices increased 10.6% yoy.
■ Reiterate sector Overweight on valuations. Sector top picks: CIT and UOL.

Slower Dec home sales

● Dec 2021 monthly home sales came in at 719 units. Excluding executive condominiums (ECs), private home sales amounted to 650 units, down 58% mom and 47% lower than the same period a year ago. Rest of Central Region (RCR) made up the largest 45% of monthly sales, led by new project Mori, which saw 71 of its 100 units marketed taken up, while Normanton Park moved another 73 units, bringing its
take-up rate to date to 80%. Suburban projects (Outside Central Region, OCR) accounted for another 34% of sales; while Core Central Region (CCR) projects accounted for 21% of volume sales.

Primary volume transactions up 29.4% in 2021…

● Transactions for the whole of 2021 amounted to 13,349 units, up 29.4% yoy. Meanwhile, according to Singapore Real Estate Exchange (SRX) data, resale transactions remained 4.1% higher mom in Dec 2021 and totalled 20,079 units in 2021, up 81.8% from 2020. With the latest round of property cooling measures put in place in Dec 2020, which included raising Additional Buyers’ Stamp Duty (ABSD) and lowering Total Debt Service Ratio (TDSR), as well as lesser supply of new launches, we believe volume transactions are likely to moderate in the near term. Accordingly, we expect primary home sales volume to dip to 10,000 units in 2022F, or back to close to 2020’s level.

…while private home prices increased 10.6% yoy

● According to the Urban Redevelopment Authority (URA), the flash estimate for 4Q21 price index rose 5% qoq vs. +1.1% qoq in 3Q21. This was led by stronger prices across all regions, particularly in the RCR. Based on the latest data, private home prices have increased 10.6% for whole of 2021. In the resale market, private home prices were also 10.3% higher yoy for 2021. With the latest cooling measures and
taking into account limited new launch supply, we anticipate home prices to rise 0-5% in 2022F.

Reiterate sector Overweight

● Developers’ valuations still look inexpensive to us, trading at a 47% discount to RNAV, close to 1 s.d. below long-term mean discount. We prefer developers with visible residential 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.

● Potential 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 the demand for housing.