mr funny
12-06-11, 15:33
http://www.businesstimes.com.sg/sub/news/story/0,4574,442835-1307822340,00.html?
Published June 11, 2011
Property shares dip further on new supply
Analysts say that while more demand-side market cooling measures are possible, much of the policy risk has been priced in
By UMA SHANKARI
PROPERTY stocks, which have been depressed since Polling Day, dipped further yesterday after the government rolled out another bumper supply of sites for the second half of the year.
Analysts also noted that while more demand-side measures to cool the property market are possible, much of the policy risk has already been priced into real estate stocks.
The FTSE ST Real Estate Index dipped slightly by 0.9 per cent yesterday, a day after the Ministry of National Development (MND) said that it would sell new land for at least 17,510 private homes and executive condominium (EC) units in 2011 - a sharp increase from 2010, when land for a then-record 13,945 new homes was sold to developers.
MND released 17 residential sites on the confirmed list of the H2 2011 government land sales (GLS) programme. Together, these sites can yield 8,115 new private homes and EC units.
The new supply comes on top of the land supply for 9,395 private homes and ECs that will be sold in the H1 2011 programme.
Analysts said that the bumper supply was largely expected.
'As expected, a strong pipeline of residential supply is maintained in the H2 2011 GLS programme in response to the need to provide more mass market housing and the government's intention to keep accelerating prices in check,' said DBS Group Research analyst Lock Mun Yee.
On top of the bumper supply, analysts also pointed to National Development Minister Khaw Boon Wan's most recent blog entry as cause for concern. Mr Khaw expressed his worries about a 'sharply rising property market' on Thursday.
'We believe the government would likely have to implement more cooling measures, especially if there is continued strength in mass-segment prices,' said OCBC Investment Research analyst Eli Lee.
Added Citigroup analyst Wendy Koh: 'Developers sold a total of 1,788 units (excluding ECs) in April (an increase of 29 per cent month on month), which is a five-month high. If we continue to see high volumes in May (post-election), we do not rule out the possibility of more measures.'
In particular, she pointed out that one source of uncertainty comes from the ongoing review of the income ceiling for buying new HDB flats, which could be raised in the coming months.
'We think it is important that the Urban Redevelopment Authority and the Housing and Development Board take into account the potential impact of the income ceiling before making any decisions on further measures on the private property market,' Ms Koh said.
But analysts also said that much of the policy risk has already been priced into property counters.
'At this point, we believe much of the headwinds appear to have been factored in but near-term catalysts are lacking and stocks could trade range bound,' said DBS's Ms Lock.
OCBC's Mr Lee agreed: 'We maintain our neutral rating on the residential property sector, as we believe these price dips are mostly priced in given the significant forward visibility at this juncture. Note that share prices of major property developers (such as City Developments and CapitaLand) have fallen significantly year to date, despite continued increases in property prices, as investors brace for potentially lower prices ahead.'
Citigroup said that since policy risks remain, it prefers real estate investment trusts over developer stocks. DBS said that it prefers real estate companies with a diversified business model and strong balance sheet capacity to acquire sites selectively.
Analysts also said that they expect developers to be selective in land bids and bid prices in future as there seems to be a limited upside for home prices now.
Property counters have fallen since May 6, the day before Polling Day, as punters anticipate that more policies would be rolled out to address public concerns about housing.
The FTSE ST Real Estate Index is now 1.4 per cent below its May 6 level. The broader benchmark Straits Times Index, on the other hand, fell by a smaller 0.7 per cent over the same period.
The FTSE ST Real Estate Index has also shed 6.4 per cent since the start of this year on worries about cooling measures.
Published June 11, 2011
Property shares dip further on new supply
Analysts say that while more demand-side market cooling measures are possible, much of the policy risk has been priced in
By UMA SHANKARI
PROPERTY stocks, which have been depressed since Polling Day, dipped further yesterday after the government rolled out another bumper supply of sites for the second half of the year.
Analysts also noted that while more demand-side measures to cool the property market are possible, much of the policy risk has already been priced into real estate stocks.
The FTSE ST Real Estate Index dipped slightly by 0.9 per cent yesterday, a day after the Ministry of National Development (MND) said that it would sell new land for at least 17,510 private homes and executive condominium (EC) units in 2011 - a sharp increase from 2010, when land for a then-record 13,945 new homes was sold to developers.
MND released 17 residential sites on the confirmed list of the H2 2011 government land sales (GLS) programme. Together, these sites can yield 8,115 new private homes and EC units.
The new supply comes on top of the land supply for 9,395 private homes and ECs that will be sold in the H1 2011 programme.
Analysts said that the bumper supply was largely expected.
'As expected, a strong pipeline of residential supply is maintained in the H2 2011 GLS programme in response to the need to provide more mass market housing and the government's intention to keep accelerating prices in check,' said DBS Group Research analyst Lock Mun Yee.
On top of the bumper supply, analysts also pointed to National Development Minister Khaw Boon Wan's most recent blog entry as cause for concern. Mr Khaw expressed his worries about a 'sharply rising property market' on Thursday.
'We believe the government would likely have to implement more cooling measures, especially if there is continued strength in mass-segment prices,' said OCBC Investment Research analyst Eli Lee.
Added Citigroup analyst Wendy Koh: 'Developers sold a total of 1,788 units (excluding ECs) in April (an increase of 29 per cent month on month), which is a five-month high. If we continue to see high volumes in May (post-election), we do not rule out the possibility of more measures.'
In particular, she pointed out that one source of uncertainty comes from the ongoing review of the income ceiling for buying new HDB flats, which could be raised in the coming months.
'We think it is important that the Urban Redevelopment Authority and the Housing and Development Board take into account the potential impact of the income ceiling before making any decisions on further measures on the private property market,' Ms Koh said.
But analysts also said that much of the policy risk has already been priced into property counters.
'At this point, we believe much of the headwinds appear to have been factored in but near-term catalysts are lacking and stocks could trade range bound,' said DBS's Ms Lock.
OCBC's Mr Lee agreed: 'We maintain our neutral rating on the residential property sector, as we believe these price dips are mostly priced in given the significant forward visibility at this juncture. Note that share prices of major property developers (such as City Developments and CapitaLand) have fallen significantly year to date, despite continued increases in property prices, as investors brace for potentially lower prices ahead.'
Citigroup said that since policy risks remain, it prefers real estate investment trusts over developer stocks. DBS said that it prefers real estate companies with a diversified business model and strong balance sheet capacity to acquire sites selectively.
Analysts also said that they expect developers to be selective in land bids and bid prices in future as there seems to be a limited upside for home prices now.
Property counters have fallen since May 6, the day before Polling Day, as punters anticipate that more policies would be rolled out to address public concerns about housing.
The FTSE ST Real Estate Index is now 1.4 per cent below its May 6 level. The broader benchmark Straits Times Index, on the other hand, fell by a smaller 0.7 per cent over the same period.
The FTSE ST Real Estate Index has also shed 6.4 per cent since the start of this year on worries about cooling measures.