Chart of the Day: Here's why there's nothing impressive about the latest home sales

It's just a wee bit higher than historical average.

According to CIMB, private home sales (excl. ECs) grew 54% mom (but fell 48% yoy) to 742 units in Aug, according to URA. About 726 EC units were sold accounting for 49% of total new home sales in Aug.

Units in outside central region (OCR) continued to form the bulk of the sales at 87% of the total.

Here's more from CIMB:

The top selling projects were Ecopolitan (EC), Lush Acres (EC) and The Tembusu.

Our channel checks with developers and on the ground suggest that the longer loan processing time and uncertainty in the application of the new TDSR ruling may be to blame for Jul’s weak demand.

The volume pickup in Aug suggests that the market is gradually adjusting to the TDSR rule. The take-up rate in Aug for new launches (excl. ECs) was not impressive at 20-65%, which points to lukewarm volumes ahead and more competitive pricing from developers.

But a credit-led crash in the physical market appears to have been averted. We retain our view that general households are not overstretched with average mortgage-to-income ratios at 33% (assuming a 3.5% mortgage rate vs. c.1.5% currently), still much lower than the last two peak cycles.

Supply and policy concerns are not new and will remain a drag on ASPs, though the bottomup impact on developers’ valuations looks more manageable in this cycle.

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