Better numbers in April. Singapore developers sold 1,207 private units in April, down 1% MoM. This brings total YTD primary sales to 3,858 units, or 88% of total 2008 annual sales. This is the third consecutive month where sales have crossed 1,000 units/month. Monthly sales volume is set to decline through the year as pent-up demand wanes. However, the annual figure should still exceed the historical average of 7,000 units.
Demand moving in from the mid-segments too. In contrast to February and March, April sales volume was driven by demand in the mid-end and high-end segment, as sales in Core Central Region (CCR) and Rest of Central Region (RCR) accounted for 57% of total sales. Furthermore, units transacted at over S$1,200/sf accounted for 18% of the total (1% in March), suggesting an increasing risk appetite for homebuyers.
Changing price estimates. April sales also illustrated that MoM pricing is stabilising. This concurs with our channel checks in the secondary market across Singapore. We had been expecting a 50% peak-to-trough correction in Singapore residential prices - 40% based on fundamentals and another 10% in “overcorrection”. With affordability factors improving and buyers showing more interest, we have eliminated this additional 10%, and we now expect prices to stabilise following the correction in 1Q09.
New RNAV estimate for developers. As such, we have raised our RNAV estimate for CapitaLand (CAPL SP - S$3.11 - BUY) by S$0.11 to S$3.20/share, while also raising our estimate for City Developments (CIT SP - S$7.78 - U-PF) by S$0.54 to S$7.38. Upward movement in residential prices is unlikely given the large supply pipeline, absence of foreign demand and the weakening rental market.
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