Private home prices down in Q1 flash estimate

[princess_morbucks]

http://www.todayonline.com/singapore/private-home-prices-down-q1-flash-estimate


SINGAPORE — Private residential property prices here dropped 1.3 per cent in the first quarter of this year, according to flash estimates released by the Urban Redevelopment Authority (URA) today (April 1).

The private residential property index fell by 2.7 points to 211.6 points in Q1, down from 214.3 points in the previous quarter.

The URA added that prices of non-landed private residential properties in the core central region, the rest of central region and outside central region declined in the first quarter of this year.

In the Core Central Region, prices fell 1.3 per cent, less than the 2.1 per cent decline in the previous quarter. This is the fourth consecutive quarter of price decline in this segment.

In the Outside Central Region, prices decreased for the second consecutive quarter. It fell by 0.3 per cent in the first quarter, lower than the 1.0 per cent decrease in the previous quarter.

Prices in the rest of central region decreased 2.8 per cent, compared to the increase of 0.4 per cent in the previous quarter.

Prices of landed private residential properties fell for the second consecutive quarter, by 0.6 per cent, after the decline of 1.0 per cent in the previous quarter.

URA says it will release the full real estate statistics for the first quarter in four weeks’ time.

[princess_morbucks]

http://www.theedgesingapore.com/blog-heads/joan-ng/47866-weekend-comment-apr-4-property-blues.html


ON APRIL 1, the Urban Redevelopment Authority released its flash estimate of the price index for private residential property in 1Q2014. The index is estimated to have fallen 2.7 points q-o-q, from 214.3 points in 4Q2013 to 211.6 points in 1Q2014. This represents a 1.3% decline, accelerating from the 0.9% decline reported in 4Q2013.

Real estate-related stocks, on the other hand, have been surprisingly buoyant. The FTSE ST Real Estate Index ended the month of March up 1%, according to FTSE’s monthly report. This was below the 2.5% gain in the Straits Times Index (STI) and the 1.3% gain in the FTSE ST All-Share Index. Nevertheless, it suggested that investors still see value in select property counters.
The top five gainers within the FTSE ST Real Estate Index in March were Fragrance Group, up 15.9%; Centurion Corp, up 14.5%; China New Town Development Co, up 8.3%; Ascendas India Trust, up 7.7%; and City Developments (CDL), up 7.6%.

At the other end of the spectrum, the weakest five were Global Logistic Properties (GLP), down 6.4%; Ying Li International Real Estate, down 4.8%; OUE Hospitality Trust and Yanlord Land Group, both down 4.5%; and Keppel REIT, down 3%.

The 10 largest constituents of the FTSE ST Real Estate Index are Hongkong Land Holdings, GLP, CapitaLand, CDL, CapitaMall Trust, Ascendas REIT, Suntec REIT, CapitaCommercial Trust, UOL Group and CapitaMalls Asia (CMA).

Somewhat more surprisingly, the FTSE ST Real Estate Index managed to outperform the STI this week, ending April 4 at 717.5 points, up 1.7%. The STI, in comparison, ended the week at 3,212.7 points, up 1.3%. Should investors prepare for a sell-off? Which counters can they count on?

In its latest note to clients, Deutsche Bank says it is expecting a decline in residential property prices of 5% to 10% this year. “Our preference remains for the integrated developers with limited domestic exposure such as CapitaLand and Keppel Land,” the bank says. “Our top sector pick is CapitaLand.”

CIMB Research has a similar recommendation. It is expecting a steeper fall in property prices of 10% to 15% this year and next. “This is fuelled by the decline in investment and foreign demand, higher price sensitivity within the upgraders segment and significant supply in the pipeline,” it says. “Our recent ground checks suggest that it is still a buyers’ market, particularly in the secondary market. Prices are just beginning to come off. We believe the catalyst to drive down physical prices will be supply, with 17,540 and 21,299 units expected to complete in 2014 and 2015, respectively – more than two times the 20-year historical average supply of 8,034 units p.a..”

At the same time, CIMB thinks there is no need to be particularly bearish. “The mitigating factors are a healthy household balance sheet and lower speculative demand through the current cycle, which may prevent forced selling during the downturn,” it says. “We take comfort in the fact that buyers are generally not over-leveraging to buy residential properties, at a five to six times home price-to-income ratio and 23% to 29% mortgage-to-income ratio. Moreover, developers have diversified into investment properties and overseas, with the Singapore residential segment making up less than 30% of gross asset value for most developers.

The brokerage currently favours developers with lower residential exposure. Its top picks are GLP, CMA, UOL and Frasers Centrepoint.

UOB Kay Hian, on the other hand, is sounding a much more positive note. While it does expect a 5% to 10% correction in property prices this year, it is calling this a “healthy correction.” The brokerage also has an “overweight” call on property-related equities. “We believe the market has over-discounted the negative prospects, pricing in a 40% to 50% fall in property prices,” UOB says in an April 2 report. It has a preference for deep value and diversified developers and lists Keppel Land, Ho Bee Land and Wing Tai Holdings as its preferred picks.