Chart of the Day: Here's real proof that 2014 home sales are bound to be sore losers

Buyers are becoming increasingly locals.

According to CIMB, new home sales (excluding ECs) were up 31% mom and 2% yoy in Feb. The higher volume largely came from the two new launches, Riverbank and

Rivertrees, with each selling around 200 units at median prices of S$1,033 per sq ft and S$1,111 per sq ft, respectively.

Here's more from CIMB:

This translates into net margins of 9-11% for the developers.

We believe that the buyers were drawn to the favourable prices of the adjacent Rivertrees and Riverbank launches (located in the outside central region).

During our visit to the show flats, we noticed that the buyers were mainly locals who favoured the smaller units priced below S$1.5m.

We believe that the private residential prices will continue to face pressure and developers’ margins will be squeezed by the elevated land prices.

The only silver lining of this cycle is that there is less speculative/investment demand, as buyers are generally not over-stretching to own residential properties.

For the properties in the S$1.0m-1.5m price range, we estimate that the home price to household income ratio (top 20th percentile) is 5-8x, still below the peaks in 1996 (10.6x) and 2007 (8.9x).

The current mortgage packages offered by the banks remain very attractive with floating rate spreads of 80-100bp above the 3-month SIBOR.