CGS-CIMB Research analyst Lock Mun Yee has maintained her ‘overweight’ rating for the Singapore property sector after the property price index flash estimate for 1Q2021 showed that private home prices rose 2.9% q-o-q, compared to 2.1%  in 4Q2020.

The data, sourced from the Urban Redevelopment Authority, showed that prices in the Rest of Central Region (RCR) delivered the strongest improvement, growing 6.1% q-o-q. 

In comparison, prices in the Outside Central Region rose only 0.9% q-o-q, while prices in the Core Central Region declined 0.3% q-o-q.

In a research note dated April 1, Lock notes that private home prices have risen in the last four consecutive quarters, totalling an increase of 6.2% from its 1Q2020 low. She cites robust takeup during new launches, active secondary market transactions amid a still low mortgage rate environment and potential wealth creation from a robust stock market performance as factors supporting the selling prices.


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“The improvement in private home prices in 1Q2021 is ahead of our expectation of up-to-a-5% increase for the whole of 2021,” she adds.

Meanwhile, the Housing Development Board resale price flash estimate showed that HDB resale prices rose 2.8% q-o-q in 1Q2021. HDB resale prices have increased by 8.6% from its 2Q2019 low.

Given the strong price performance in the past two quarters amid healthy transaction volumes, Lock believes there’s a higher possibility of new property cooling measures being implemented.

Nonetheless, Lock still views valuations as inexpensive.

“Developers’ valuations still look inexpensive to us, trading at a 45% discount to RNAV, close to 1 standard deviation. below long-term mean discount.

To that end, her top picks for developers are still CapitaLand, UOL and City Developments Limited (CDL). All three counters have “add” calls with target prices of $4.04, $7.91 and $8.97 respectively.


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“We prefer developers with high recurring cashflow bases and strong balance sheets that would enable them to tap into any opportunities during this slower cycle,” she reiterates.

As at 10.41am, shares in CapitaLand, UOL and CDL are trading at $3.78, $8 and $8.36 respectively.