Slower take up rates could dampen performance of property stocks

Property sales in Singapore have fallen by 27 percent so far this year.

The anticipated slower property sell-through rates, due to more launch units in August, could continue to dampen the performance of property stock prices, said CGS-CIMB.

This comes as the outperformance of property stocks has historically shown the highest correlation to take-up rates.

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With this, the firm expects property stocks to continue to remain range-bound in the near term.

It noted that private home sales fell 27 percent to 6,476 units in the first eight months of 2018.

“Whilst replacement demand from displaced en bloc sellers could provide some support for transaction volumes, overall, we expect the cooling measures to have a dampening effect on buying sentiment and pricing expectations,” said CGS-CIMB.

And given the recent hike in land prices, which resulted in high landbank cost, “any significant price retracement or prolonged land holding period could impact development margins”.

The firm believes that faster turn asset and good sell-through rates are key to preserving development margins.

Meanwhile, CGS-CIMB noted that August home sales showed selective buying post property curbs.

Home sales fell 64 percent month-on-month in August to 616 units, excluding executive condominiums (ECs). Including ECs, 639 new units were sold.

The Tre Ver sold 22 percent of its 729 units within a month of its launch at $1,551 psf on average.

Selected ongoing projects saw an additional four to 10 percent changing hands such as Stirling Residences, Affinity at Serangoon, Riverfront Residences and Park Colonial.

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Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg