AFTER last year’s stellar run-up in the property sector, a slower 2013 can be expected, a new report predicts.
Despite another round of tightening from the Government last October, home prices and volumes here continue to be strong, noted Credit Suisse analysts Yvonne Voon and Chok Sing Ping in the report released yesterday.
But with prices steadily rising in the mass market and Housing Board segments, the risk of new measures still persists, they added.
However, prices are likely to remain flattish this year, supported by low vacancy rates for rental properties and strong affordability, the report said.
Vacancy rates remain below the long-term historical average of 6.9 per cent while low unemployment should help keep the finances of households healthy.
“(However), we expect a further 5 to 10 per cent downside risk for the prime segment due to vacancy risks, given the oncoming supply and unsold units versus weak rental demand.
“Meanwhile, we expect mass market prices to be slightly more resilient, supported by a relatively affordable price tag, which seems to be the sweet spot for upgraders and investment demand,” the report added.
Sales volumes are also likely to slow this year as the number of units in the confirmed list of the Government Land Sales (GLS) programme for the first half of this year has dipped compared with the GLS in 2011.
Developers are also likely to be less aggressive this year, Ms Voon and Ms Chok said. This is because developers such as CapitaLand and Keppel Land have won bids in the past six months.
“(Therefore) we believe that there will be less urgency for them to bid for GLS sites, although we maintain our stance that attractive sites such as Alexandra View, Mount Sophia and Prince Charles Crescent are still likely to see strong bids.”
They noted share prices of Singapore real estate investment trusts (S-Reits) have also been boosted due to increased investor demand for yields.
Total returns for such Reits are expected to be in the “mid-teens” this year, the report added.
“The weighted-average yield for S-Reits is around 5.5 per cent, which implies that a further yield compression of 50 basis points should easily translate into share price appreciation of about 10 per cent,” it said.
The added kicker of the appreciation of the Singdollar should offer investors a total return in the teens.
(Source: The Straits Times)