http://www.straitstimes.com/Money/St...ry_664956.html
May 5, 2011
Policy fears dent property stocks
Mass-market private home demand may fall if HDB income ceiling is raised
By Jonathan Kwok
PROPERTY stocks fell yesterday on fears that a possible raising of the household income ceiling for HDB build-to-order flats could cool demand for mass market private properties.
The Government had indicated that the $8,000 income ceiling for families buying a flat from HDB could be raised to $10,000 after the General Election.
Shares of listed property developers dipped yesterday amid concerns among investors that this would shift demand away from private projects.
City Developments, which started trading without its latest dividend on Tuesday, fell 40 cents to $11.04. Keppel Land shed six cents to $4.07, while CapitaLand slid five cents to $3.27. Wing Tai fell three cents to $1.54, UOL shed eight cents to $4.73 and Fraser & Neave, with a big property arm, fell five cents to $6.23.
'As Polling Day in Singapore on May 7 approaches, property stocks are being sold down over concerns that there could be more policy changes affecting both the public and private property markets,' said a note by Kim Eng Securities.
'For instance, the Government will now review the possibility of raising the household income ceiling for buying new HDB build-to-order flats from the current $8,000 to $10,000. If implemented, the demand for mass market private properties may be diluted, possibly leading to a price correction in that segment.'
OCBC Investment Research said the possible higher income ceiling could suggest an unchanged hawkish stance on property prices post-General Election.
'This runs contrary to the views of some that the government curbs so far are mostly pre-election moves and that the General Election could be a positive price catalyst.
'We think the upside in private residential prices remains limited due to continued policy overhang in 2011, coupled with expected increases in interest rates and physical supply in 2012 to 2013.'
OCBC remains neutral on the residential property sector, and has a 'hold' rating on City Developments with a fair value of $10.72.
But JP Morgan said it had a 'positive stance' on the Singapore property sector, adding that developers that have reported results have come out with better numbers in general despite the distortion from some new accounting rules.
JP Morgan said developers here are trading at a discount to net asset value estimates, a level it feels is 'an attractive entry level from a valuation perspective'.
Some developers are also continuing to get the thumbs up. Citi Investment Research kept its 'buy' call on Wing Tai but dropped its target price from $2.53 to $2.05. Citi said Wing Tai has 'attractive valuations', but will face slower-than-expected sales at some of its projects such as Belle Vue, as well as higher-than-expected tax. It also highlighted increased risks of Wing Tai suffering from policy changes.
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