Chart of the Day: Low home inventory weighs down project launches

Houses with sale licences in the range of 500 to 1,000 in early-2018.

This chart from Maybank Kim Eng shows that new residential project launches were limited in early 2018 as the resources available for sale fell to multi-year lows between 500 to 1,000, the lowest range since end-2007. The number of newly launched units fell to 5,000, lower than the amount by end-2008.

Saleable resources refer to housing inventory with sales licences.

Maybank KE analyst Derrick Heng said the low developer sales for the first five months of 2018 could be attributed to a lack of new launches, not a sign of market weakness. About 3,431 homes were sold in the first five months of 2018, down 38% from the same period last year.

“We believe housing demand remains strong, as evidenced by healthy overall volumes, including secondary market transactions,” the analyst added. “We maintain our new-home sales forecast of 12,000 units for this year, expecting a stronger 2H2018 to provide re-rating catalysts.”