Property

Property: 4Q15 URA private property prices fell 0.5% QoQ, representing a ninth consecutive quarter of decline and a total price decline of 8.4% from its 3Q13 peak. While prime (CCR) declined 0.4% QoQ, both mid-market (RCR) and mass-market (OCR) saw flat prices QoQ. CS also note transactions in 2015 continued to be soft, and prices may have also been affected by lack of activity.

HDB resale prices saw the first QoQ increase since 2Q13, at +0.2% QoQ, bringing 2015 prices at -1.5% YoY. Headwinds are expected, however, with HDB planning to launch 18,000 new BTO flats in 2016, 20% higher than the 15,000 flats launched in 2015.

In 2016, CS expects private property prices to soften by 5-10%, which could subsequently lead to a re-calibration in property cooling measures in 2H16, most likely starting with adjustments in stamp duty measures.

House top pick is CDL (TP: $12.00). Further capital recycling could be a key rerating catalyst, with CDL best positioned for a turnaround in the Singapore residential market sentiment. Valuations remain attractive at 0.79x P/B (-1.4 SD from historical average).