Singapore Property - Downhill continues

Dec-14 new home sales fell 46% MoM to 230 units, extending the decline in the preceding month. Prices remain stagnant in view of developers’ strong balance sheets and rising difficulty in landbank replenishment. We expect 2015 to be another subdued year for the residential sub-sector, marked by marginally higher mortgage rates, tepid volumes and declining market share. Unless existing cooling measures are relaxed, we find it difficult to turn positive on residential-focused developers. GLP and CAPL remain our top picks.

· Dec-14 new home sales fell 46% MoM (-11% YoY) to 230 units, similar to Nov-14’s decline of 46%. Including executive condominiums (ECs), monthly volumes would have plunged 68% MoM (+22% YoY) to 406 units. Aside from existing cooling measures, we believe the significant decline is due to the traditionally slow period in Dec and scarcity of new launches (-94% MoM to 53 units). Full-year 2014 new home sales of 7,378 units represent a YoY decline of 51% and slightly missed our forecasted 8,000 units.

· Mass market (Outside Central Region) comprised 76% of total sales, followed by Rest of Central Region (15%) and Core Central Region (9%). 80% of transactions were done below S$1,500 psf. The Terrace, an EC, which was the top selling project (128 units; S$813 psf; 17% take-up), was the only new launch. Other projects which sold well include Bellewaters (16 units; S$804 psf) and Lakeville (16 units; S$1,259 psf).

· Market share remains tepid, as major developers accounted for only 24% of total sales in Dec-14. This was led by UOL (10%), City Developments (10%), CapitaLand (2%) and Keppel Land (2%). For the full-year 2014, their market share was 35% and similar to 2013’s 34%. However, we expect this to narrow to below 30%, in view of other non traditional players’ more aggressive bids in land tenders.