Singapore home prices post longest losing streak in 5 years

SINGAPORE: Singapore’s home prices slid for a third consecutive quarter, the longest losing streak in five years, as tighter mortgage measures cooled demand in Asia’s second-most expensive housing market.

An index tracking private residential prices fell 1.1% to 209.3 points in the three months ended June 30, following a 1.3% decline in the previous three-month period, according to preliminary data released by the Urban Redevelopment Authority yesterday.

Declines may deepen as the government extends a campaign to cool prices that started in 2009, with Chesterton Singapore Pte Ltd forecasting they will drop as much as 8% this year. Singapore last June capped the amount individuals are able to borrow, adding to measures that included new taxes and higher down payments.

“The price moderation last quarter was lower than expected, which probably means that the measures are here to stay for now,” said Donald Han, managing director of Chesterton Singapore Pte Ltd, a real estate consulting company. “It’s a healthy correction though volumes have dropped by half since the loan measures last year.”

The curbs in the Southeast Asian nation are proving more successful than other parts of the world where policymakers are trying to rein in asset prices, according to Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore.

“The measures in Singapore are working,” said Vikrant. “The government has been able to implement and enforce the measures very effectively compared to say China where it has been difficult to enforce.”

The Singapore government may start relaxing the curbs that were aimed at controlling demand after it sees a more meaningful decline of 8% to 10% in property prices, he said.

Apartment prices fell 1.5% in prime districts in the second quarter after sliding 1.1% in the previous three months, the URA data showed. Those in the suburbs dropped 1.1%, compared with a 0.1% decline in the previous quarter, according to the data. Prices in areas near prime districts slipped 0.6%, compared with a 3.3% decrease in the previous quarter, the data showed.

Under the new loan framework, mortgages shouldn’t push a borrower’s total debt-servicing ratio above 60% and those that do will be considered imprudent, the Monetary Authority of Singapore said in June 2013.

Mortgage loan growth at 7.6% in May was the second-slowest pace since June 2007.

A slew of property measures have raised concerns among those in the industry. Singapore could lose its competitive edge as an investment destination unless the government reviews its property cooling measures, the Straits Times newspaper reported, citing Kwek Leng Beng, executive chairman at City Developments Ltd, the country’s second-largest developer.

Singapore’s home sales rose in May to 1,470 units, the highest in almost a year, from 749 units in April, as developers marketed new projects amid declining prices, a government report showed last month. — Bloomberg

This article first appeared in The Edge Financial Daily, on July 2, 2014.