Singapore residential sector | Neutral
OCBC Investment Research, Dec 18
We see three key drivers of domestic residential prices. First, a significant physical oversupply situation is likely to persist, which will impact rental levels and vacancy rates. Second, floating mortgage rates . . . will rise alongside higher interest rates in the US, and this will add pressure on rental carry and housing affordability. Finally, on the flip side, we see potential curbs reversals after price declines reach double-digits in H2 2016 and after.
We favour high-end developers which are trading at attractive discounts to their fundamental valuations. Wing Tai (buy, fair value S$2.58) and Wheelock Properties (buy,...
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