Property developers in Singapore sold fewer homes in the first five months of 2018 compared to last year.
Developer stocks in Singapore fell 4.0 percent even as home prices rose by 7.0 percent year-to-date, reported Singapore Business Review citing a Maybank Kim Eng report.
Based on Urban Redevelopment Authority data, home sales by developers for May reached 1,121 units. This brought new home sales for the first five months of 2018 to 3,431 units, which is down 38 percent over the same period last year, said Maybank Kim Eng analyst Derrick Heng.
Heng believes that lower developer sales could be due to a lack of new launches, and not a sign of market weakness.
“We believe housing demand remains strong, as evidenced by healthy overall volumes, including secondary market transactions,” he said.
In fact, the demand-supply outlook remains supportive of a housing recovery with the share-price divergence offering an opportunity to raise sector exposure.
He expects the annual net supply for 2018 to 2020 to reach as much as 5,300 units compared to the long-term average absorption of 11,400 units.
“Furthermore, replacement demand from the 6,000+ households displaced by en bloc deals announced since 2017 will soak up a large part of this supply. Given this, we expect lower vacancy over the next few years,” he said.
With this, Maybank Kim Eng maintained its “new-home sales forecast of 12,000 units for this year, expecting a stronger 2H2018 to provide re-rating catalysts”.
And with the recent home price hike expected to continue, Maybank Kim Eng sees buying opportunities during the present share-price weakness.
“Speculative buying is near its historical low whilst existing measures continues to ensure financial prudence amongst property buyers,” added Heng.