Risk of more property curbs sinking as home sales stabilize

Primary sales expected to further slow down.

According to OCBC Investment Research, primary sales for FY13 will decline to around 16k - 18k compared to the 22k posted last year, which should discourage the government rolling out additional property curbs.

Headline total of 1,912 units sold - up 2.4% MoM. URA reported that a headline total of 1,912 new private homes (including 457 EC units) were sold in May 13, which was up 2.4% MoM and down 7.0% YoY. 

Here's more from OCBC:

Excluding EC and landed-units, 1,442 units were sold in the month - up 6.3% MoM and down 13.5% YoY with a stake-up rate of 96.8% (versus 120.0% in Apr 13). As a result, the inventory of launched and unsold units (excl. EC/landed) in the market increased by 1.7% MoM to 5,295 units.

Uptick in mid-tier segment sales. The majority of sales continues to fall in the mass-market segment (Outside Central Region or "OCR") with 718 units sold, forming 49.8% of total sales and is flat MoM. A key driver of OCR sales was the launch of Stratum (380 total units, Elias Rd) which sold 269 units at a median price of S$925 psf. In

the mid-tier (Rest of Central Region or "RCR") space, there was a significant 28.1% MoM uptick to 601 units sold, driven mostly by a 172.2% MoM increase in units launched. Key launches include Corals at Keppel Bay (366 total units, Keppel Bay Drive) 132 units sold at S$2,150 psf, and KAP Residences (142 total units, King Albert Park) 105 units sold at S$1,839 psf.

Diminished regulatory risks from stabilizing sales. We see FY13 primary sales slowing down to a rate of 16k-18k versus 22k units in FY12, pointing at a less frothy albeit still healthy environment. In view of this, the risks of incremental property curbs going forward appear more diminished, in our view. In addition, developers are likely to show a more measured approach in tendering for land ahead, though demand is likely stay firm.