Curbs loom as headline residential sales spike

In January 2012 there were 2,077 private residential units sold, representing a 210% MoM change.

OCBC Investment Research said:

URA data yesterday showed that 2,077 private residential units were sold in Jan 12. This was up 210% MoM, 35% YoY and a 14-month high. Excluding EC and landed units, 1,868 units were sold - up 205% MoM and 62% YoY - the most units sold in a whooping 21-month period since Apr 10 (2,109 units). The Jan 12 take-up rate was 85%.

The vast majority of sales (94%) occurred in the mass-market segment (OCR). In particular, three quarters of these sales occurred in OCR projects newly launched in Jan 12. Major launches are Watertown (Punggol) - 770 out of 992 units sold with median price of S$1,169 psf; The Hillier (Hillview Rise) – 387 out of 528 at S$1,289; and Parc Rosewood (Rosewood Dr.) – 198 out of 689 at S$951. In stark contrast, the high-end/mid-tier was subdued, with sluggish take-up rates and negative MoM/YoY sales.

In spite of anecdotal evidence of discounts/rebates, we view the key driver here to be undoubtedly still healthy mass-market demand, underpinned by strong HDB resale prices and monetary liquidity. That said, Jan 12 sales was likely somewhat skewed upwards by the launch of Watertown – a large 992-unit mixed development near an MRT station which is relatively uncommon, and pent-up buyer demand from Dec 11 after policy curbs.

Maintain NEUTRAL on residential developers. Given the strong show of political will to cool prices in Dec 11, we are wary of more curbs if headline sales escalate from here. We also remain cautious of the likely lagged impact on mass segment demand should global macro issues weigh on domestic economic growth ahead.