There's a still market for mass-mid tier homes

But they have to be priced correctly.

According to CIMB, demand still remains for mass-mid tier homes despite more buyers shunning away from a purchase due to restrictive total debt service ratio rules, as evidenced by the decent sales of well-priced projects like Sky Vue and Thomson Three.

"While TDSR ruling continues to weigh on overall sector demand, healthy take-up rates in recent new launches suggest that there is still a market for mass-mid tier homes at the right pricing," said CIMB.

Government data showed that private home sales (excluding executive condos) rose 68% mom but fell 52% yoy to 1246 units in September.

"Demand is supported, but at lower prices. Sky Vue and Thomson Three had high take-up rates of c.84% in September and were transacted at median price of S$1,401psf and S$1,362psf respectively (actual prices after discount at about 5-10% lower)," said CIMB.

In comparison, "The Glades had lower take-up rate of 45%, which we believe can be attributed to its higher median price of S$1,518psf," the research firm noted.

CIMB expects home prices to start correcting by up to 10-15% as developers begin to price their projects lower in order to secure more sales.

"We attribute the supportive demand to strong household balance sheets as average mortgage-to-income ratio (at 3.5% interest rate) and median house price-to-income ratio for the private segment are estimated to be at lows of 29% and 6.8x respectively. Mid- to long-term supply issue remains our key concern, and we expect private home prices to correct 10-15% by 2015," said CIMB.