February home sales the highest in 31 months

More property curbs however are seen as the forefront risk for developers.

URA data yesterday showed that 3,138 new private residential units were sold in Feb 12. This was up 51% MoM and 155% YoY. Excluding EC and landed units, 2,379 units were sold - up 27% MoM and 122%YoY - the most units sold in 31 months since Jul 09. The Feb 12 take- up rate also increased above par to 110%.

Here’s an in-depth analysis from OCBC analyst Eli Lee:

Mid-tier segment sales bounce after Jan 12 lull

While the pace of sales in the mass-market segment (Outside Central Region or "OCR") carried its momentum into Feb 12 with 1,801 units sold (1,757 in Jan 12), we also saw strong sales performance in the mid-tier segment (Rest of Central Region or "RCR") where 524 new homes were sold, up a whooping 457% MoM. This was mostly due to a sell-out launch at Guillemard Edge (275 units sold), and a pickup in sales at Thomson Grand and Centra Residence.

Broad-based buying underpinned by strong liquidity

The previous month’s sales were mostly dominated by new OCR launches but this grew into broad-based buying across the market in Feb 12. In our view, buyers sidelined by the Dec 11 ABSB curbs likely re-entered the market after witnessing the strong bounce in Jan 12 new home sales. With ample liquidity and strong HDB resale prices, we now expect the healthy sales momentum to carry on in 1H12, barring additional policy curbs.

More property curbs as forefront risk now

We see additional property curbs as the forefront risk for domestic residential developers at this juncture. Given the government’s track record, we believe its commitment to prevent property overheating is unambiguous. Moreover, macro-economic uncertainties persist, in our view, which could have a lagged impact on domestic economic growth and buyer demand ahead.