Singapore home prices may drop further, says StanChart

SINGAPORE — Home prices here will probably fall further before the housing curbs introduced in the past five years are scaled back, Standard Chartered’s South-east Asia head said.

“You would start to take away some of these measures if price growth reaches a certain level of equilibrium,” Mr Lim Cheng Teck, chief executive officer for the Association of Southeast Asian Nations region, said in an interview. “I don’t think we are at equilibrium yet.”

The city-state’s private home prices dropped by the most in almost five years following a campaign that started in 2009 to curb property market speculation. Government measures included taxes on property sales, additional levies on foreign buyers and mortgage limits.

Mr Lim declined to predict how much of a downside he expects for home prices before housing measures would be lifted.

Under Singapore’s loan framework, lenders must consider a borrower’s total debt when granting mortgages, the Monetary Authority of Singapore said last year.

A borrower’s loan repayments, including mortgages, should not exceed 60 per cent of income, based on the policy guidelines.

“It’s still too early to remove curbs,” said Mr Donald Han, managing director of Chesterton Singapore, a real estate consulting company. “The Government will monitor, but their fingers won’t be pressing any buttons at this point in time.”

Some developers that have cut prices by 10 to 15 per cent are drawing buyers, he said.

Mr Lim’s outlook mirrors that of CapitaLand, Singapore’s biggest developer, which said in February that the Government might start easing some of its property measures if home prices drop between 5 and 10 per cent this year.

Some curbs that were introduced were for the “short term”, such as stamp duties or taxes for home buyers, CEO Lim Ming Yan said in an interview at the time.

Urban Redevelopment Authority data showed that private residential prices fell 1.3 per cent in the first quarter, following a 0.9 per cent drop from the previous three months. The latest decline is the largest since June 2009.

Declining home sales also eased demand for housing loans. Mortgages increased only 7.9 per cent in March, the slowest pace since June 2007, data from the central bank showed.

The curbs really prevented a bubble from forming, Mr Lim said.

BLOOMBERG