Resilient Jan home sales
? Jan monthly home sales volume fell 59% yoy but came in 3.5% higher mom.
? Meanwhile, SRX data showed that private and HDB resale prices continued to inch up 0.4% and 1.1% mom, respectively.
? Reiterate sector Overweight on valuations. Sector top picks: CIT and UOL.
Jan new home sales held fairly steady mom
? Jan 22 monthly home sales came in at 725 units, with no significant new project launches during the month. Excluding executive condos (ECs), private home sales amounted to 673 units in Jan 22 (-59% yoy, but relatively stable vs. Dec 21’s 650 units). Rest of Central Region (RCR) made up the largest portion of monthly sales (43%), led by Normanton Park, which continued to move another 94 units, bringing its take-up rate to date to 85%, as well as The Woodleigh Residences. Suburban projects (Outside Central Region, OCR) accounted for another 41% of sales, while Core Central Region (CCR) projects accounted for 16% of volume sales.
Private resale volume down yoy, while HDB resale was fairly stable
? Meanwhile, according to Singapore Real Estate Exchange (SRX) data, private resale transactions was down 23.8% mom and 23.1% below the volume achieved in Jan 2021. Within the HDB resale segment, transaction volume grew 0.6% mom but was a slight 2.4% lower than a year ago. 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 level.
Home prices continued to inch up marginally
? According to SRX, private and HDB resale prices continued to rise slightly in Jan 2022 (+0.4% and +1.1% mom respectively), led by all apartment types and regions. We maintain our expectation for private home prices to rise by 0-5% in 2022F, broadly in tandem with GDP growth projections.
Reiterate sector Overweight
? Developers’ valuations still look inexpensive to us, trading at a 47% discount to RNAV, close to 1 s.d. below the 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. Sector rerating 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.