Loan restrictions to dent October home sales

The loan tenure could put pressure on big-ticket units given the larger quantum and slightly older buyer profile.

According to CIMB, mass market launches drove the spike in numbers, with the outside central region alone accounting for >2k units sold.

Here's more from CIMB:

Key launches were Eco (Bedok; median ASP of S$1,283 psf), Kovan Regency (Kovan; median ASP of S$1,275 psf) and Riversails (Upper Serangoon; median ASP of  S$849 psf). Momentum held steady for mid- to high-end projects.

Islandwide take-up stood at 1.2x as units sold exceeded units launched in Sep, with strong take-up for new mass market launches, and launched inventory cleared in the rest of the central (6.0x take-up) and core central (1.5x) regions.

What We Think
Sep numbers were probably driven by increased supply from launches deferred in Aug as well as QE3. With rates staying low for an extended period, investor tolerance of low yields should persist. Low interest rates should also accelerate home buying decisions.

The loan tenure measure should dent October sales figures as ground checks suggest that cheques for some larger units such as penthouses have been withheld.  Loan restrictions could put pressure on big-ticket units (high end/large units) given the larger quantum and slightly older buyer profile.

Based on Sep headline figures and 3Q URA flash data, prices have held up well. The recent loan tenure restriction signals policymakers’ intention to intervene if physical prices remain elevated.