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SINGAPORE: Singapore’s home prices slid for a second consecutive quarter in the January to March period, as tighter mortgages cooled demand in Asia’s second most expensive housing market.
An index tracking prices of private residences fell 1.3% to 211.6 points in the quarter ended March 31, following a 0.9% decline in the previous quarter, according to preliminary data released by the Urban Redevelopment Authority yesterday. The latest drop is the largest since June 2009.
The latest price drop “will set the tone for 2014”, said Donald Han, managing director of Chesterton Singapore Pte Ltd. “Prices in prime areas could fall more than in suburban areas as prime districts are primarily resale apartments, so there is no control over pricing, whereas the suburbs have new projects where prices can be controlled by developers.”
Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a campaign that started in 2009 to curb speculation in the property market. Singapore unveiled rules in June governing how financial institutions grant property loans to individuals, in addition to previous measures, such as new taxes and higher down payments.
Under the new loan framework lenders must consider a borrower’s debt when granting mortgages, the Monetary Authority of Singapore (MAS) said on June 28 last year. Home loans should not lead to a borrower’s total debt-servicing ratio rising above 60% and those that do will be considered imprudent, it added.
Home prices increased 1.1% in 2013, lower than the 2.8% gain in 2012. Mortgage loan growth at 8.4% in February was the slowest pace since July 2007, data compiled by Bloomberg based on MAS figures showed.
Apartment prices fell 1.3% in prime districts in the first quarter after sliding 2.1% in the previous quarter, the URA data showed. Those in the suburbs slid 0.3%, compared with a 1% decline in the previous quarter, according to the data.
This article first appeared in The Edge Financial Daily, on April 2, 2014.
