Property cooling measures had more bite than expected: DBS chief

SINGAPORE — DBS bank’s property loans segment shrunk by 40 to 50 per cent after last July's cooling measures, with the lender's chief executive officer Piyush Gupta saying that the government intervention had "more bite" than anticipated.

The Government shocked the market last year when it introduced a fresh round of cooling measures. The Additional Buyer’s Stamp Duty (ABSD) was increased by 5 percentage points for individuals and 10 percentage points for entities, while the loan-to-value limits were tightened.

Giving an update on DBS' market outlook for the first half of the year, Mr Gupta said at a luncheon on Thursday (Jan 10) that the bank expected the measures to result in a 20 to 25 per cent reduction in property loans, but the actual hit was around 40 to 50 per cent.

The bank had projected that it will add S$4 billion to its mortgage loan book at the start of 2018. 

Following the property curbs, Mr Gupta expected the figure to drop to between S$2.5 billion and S$3 billion, but the amount of property loans came in at under S$2.5 billion instead.

Despite the slow property market, he said that Singapore should still see an economic growth of between 2.5 and 3 per cent this year, which is within the Government's estimates of between 1.5 and 3.5 per cent.

On the macroeconomic headwinds widely expected to hit global markets this year, Mr Gupta referred to the trade tensions between the United States and China, the interest rate hikes by the US Federal Reserve, China's economic slowdown as well as Brexit. This "backdrop of anxiety" will cause financial markets to "yo-yo massively", he said, adding that the market volatility in the second half of 2018 will likely continue this year.

He also foresees that there will be a global economic slowdown this year as evidenced by the Purchasing Managers’ Index (PMI) going down in the US, China and Europe. The PMI measures manufacturing activity in an economy.

However, this "does not portend any significant recession", he said. "I don't see any recession coming at all. I think the slowdown is part of the normal cyclical slowdown."