Slow home sales in Jun 22
- Jun 22 monthly ex-EC new home sales dipped on lack of new launches.
- Private home sales for the first 6 months made up c.44% of our 2022F projections, while 1H22 prices improved by 3.9% from end-2021.
- We stay sector Overweight due to inexpensive valuations. Our sector top picks: CIT, CLI and UOL
Slow Jun in the absence of new launches
? Jun 22 monthly home sales in Singapore came in at 496 units, according to data from the Urban Redevelopment Authority (URA) released today (15 Jul 2022). Excluding executive condos (ECs), private home sales amounted to 488 units (-64% mom, -44% yoy). We believe the slower sales were due to absence of major new launches during the month, even as volume sales continue to outpace the number of new units launched in Jun 22.
? Transactions in the Core Central Region (CCR) accounted for the 42% of sales in June, with the more popular projects being Haus on Handy, Hyll on Holland, Irwell Hill Residences and Leedon Green. Meanwhile, projects in the Rest of Central Region (RCR) made up another 35% of sales. Take-up at suburban projects lagged in June, with 23% market share. With the latest data, sales (excluding ECs) for the first 6 months of 2022 totalled 4,384 units, -33.6% yoy.
Resale market transactions reflect similar trend
? Meanwhile, according to Singapore Real Estate Exchange (SRX) data, private home resale volumes declined 17.2% mom in Jun 22 (-17% yoy) while HDB resale volume fell by a smaller 0.8% mom and -7.4% yoy in the same month. We anticipate volume sales in July to improve with the launch of the 372-unit AMO Residences towards end of the month. We maintain our primary home sales volume projection at 10,000 units for 2022F, or close to 2020’s level.
New and resale residential prices remained resilient
? Based on URA data, the flash estimate for residential property price index posted a 3.2% qoq increase in 2Q22, on the back of a recovery in CCR and RCR prices. SRX reported that private resale home prices inched up by 0.8% mom in Jun 22, while HDB resale prices rose 1.2% mom over the same period, bringing YTD improvements to 3.9% and 5.4%, respectively. We maintain our expectation for private home prices to rise 0-5% in 2022F, broadly in tandem with our projection of Singapore’s GDP growth.
Reiterate sector Overweight
? Developers’ valuations still look inexpensive to us, as they are trading at a 42% 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 opportunity during this slower cycle. Our preferred picks are UOL and CIT.
? Potential sector re-rating catalysts: good sell-through rates for new launches. Downside risks: faster-than-expected interest rate hikes, slower economic outlook, and property cooling measures that could dampen demand for housing.