Property – Scaling new heights
By DMG Research
Buyers snapped up a record 1,825 private homes in Jun 09 (+9.1% qtr-on-qtr; +127.8% year-on-year), a fifth consecutive month of more than 1,000 sold units. This represents 7,374 units sold for 1H09, accounting for 73.7% of our estimated sales quantum of 10,000 units for the full year.
Mass and mid projects continue to dominate, making up 71.2% of total sales. 58.7% of transactions came under S$1,000 per sq ft (psf). Median prices for mass and mid projects were up 6.3 – 7.0% month-on-month (mom) to S$729 psf and S$911 psf respectively. Prime projects jumped 13.0% mom to S$1,661 psf, underpinned by several luxury projects, i.e. Orchard Residences (7), St Regis Residences (3) and single units in Hamilton Scotts, Nassim Park Residences and Ritz-Carlton Residences.
Prime interest surfacing gradually
We believe the appetite for prime projects is gradually surfacing, and a monthly sales volume of more than 300 units represents a good support level for further price upside potential from current levels, which remain 20 – 30% off their 4Q07 peak. This comfortable pricing should also ensure a healthy take-up for upcoming prime launches.
As foreigners have yet to enter in droves, we believe domestic and regional specu-investors should stand to profit as the current upcycle gears up. While we expect mass projects to stay buoyant, any further upward shift in current prices could put off some buyers given their higher price sensitivity, from our view. About 500 units have been sold in Jul 09 by our estimates. We
expect our 10,000 units for 2009F to be achieved, and reiterate our prognosis of +8% and +17% in residential capital values for 2009 and 2010.
Indifferent to upward price adjustments
We believe the confluence of pent-up demand, HDB upgrader market and low interest rates (driving interest towards property investment and away from bank deposits) are pivoting the robust sales activity, against the backdrop of positive sentiments and an improving macroeconomic landscape. More importantly, despite upward price adjustments for a higher number of projects, buyers were undeterred.
Price Movements for Selected Projects in Core Central Region (CCR)
Source: URA and DMG Estimates
Disclaimer
This research is for general distribution. It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities or investment instruments mentioned in this report. The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions and views expressed in this report are subject to change without notice. This report does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities, DMGAPS and its affiliates, their directors, connected person and employees may from time to time have interest and/or underwriting commitment in the securities mentioned in this report.
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