Rocketing vacancy rates threaten home sales

As property prices hit 1.8% hike.

According to CIMB, URA’s flash estimates show private property prices hitting record highs in 4Q12, up 1.8% qoq (3Q: 0.6%), the strongest quarterly increase for 2012.

Here's more from CIMB:

We take comfort in the smaller price growth on a full-year basis and expect 2013 supply to rein in price increases.

We see rising vacancy rates and policy risks for the residential sector in 2013, but remain Overweight as negative real rates continue to support asset values and NAV, potentially providing catalysts.

URA’s 4Q12 flash estimates show the strongest quarterly property price increase for 2012, of 1.8% qoq (3Q: 0.6% qoq), with strength in all regions. Prices Outside Central Region were up a strong 3.4% qoq (3Q: 1%).

Prices were up 0.8% in Core Central Region (3Q: 0.1%), while staying flat in rest of Central Region. HDB resale price growth was 2.5% qoq, up from 2% in 3Q12.

On a full-year basis, policy measures made some dent on private property prices, which were only up 2.8% yoy, below the 5.9% in 2011. While price growth persisted into 4Q12, accelerating throughout the year, 4Q’s price increases came with lower volumes and fewer launches in Nov.

We continue to expect resilient demand, though a large amount of physical completions expected in 2013 and more launches/discounts to clear old inventories could rein in 2013 prices and volumes.

We understand that 70% of Echelon has been sold following its public launch last weekend, on the back of 15-17% discounts from list prices. Old project D’Leedon sold another 133 units in Nov, on discounts.

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