StanChart sees further S’pore home price drop

COOLED DOWN MARKET, StanChart’s Asean CEO said the curbs ‘really prevented the bubble from forming. This downward adjustment in prices is not a very drastic and sharp drop. That would add to the stability of the market.’ –

SINGAPORE’S home prices will probably fall further before the housing curbs introduced in the past five years are scaled back, says Standard Chartered Plc’s Southeast Asia head.

“You would start to take away some of these measures if price growth reaches a certain level of equilibrium,” Lim Cheng Teck, StanChart’s CEO for Asean, said in an interview yesterday.

“I don’t think we are at an equilibrium yet.”

The city’s private home prices dropped by the most in almost five years following a campaign that started in 2009 to curb property market speculation, with government curbs ranging from 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.

Monetary Authority of Singapore (MAS) managing director Ravi Menon said on May 24 that the property measures may not be permanent and will only be used from time to time, The Business Times reported, citing a speech made by him.

Under Singapore’s loan framework, lenders must consider a borrower’s total debt when granting mortgages, the central bank said last year. A borrower’s loan repayments, including mortgages, shouldn’t exceed 60 per cent of income, based on the policy guidelines.

“It’s still too early to remove curbs,” said Donald Han, managing director of Chesterton Singapore Pte, a real estate consulting company. “The government will monitor but its fingers won’t be pressing any buttons at this point in time.” Some developers that have cut prices by 10-15 per cent are drawing buyers, he said.

Mr Lim’s outlook mirrors that of CapitaLand Ltd, Singapore’s biggest developer, which said in February that the government may start easing some of its property measures if home prices drop 5-10 per cent this year. Some curbs that were introduced were for the “short term”, such as stamp duties or taxes for homebuyers, CapitaLand CEO Lim Ming Yan said in an interview at the time.

An index tracking private residential prices fell 1.3 per cent in the first quarter this year, following a 0.9 per cent drop from a record in the previous three months, according to government data. The latest decline is the largest since June 2009.

Declining home sales also eased demand for housing loans. Mortgages increased just 7.9 per cent in March – the slowest pace since June 2007, according to central bank data.

The curbs “really prevented the bubble from forming”, StanChart’s Mr Lim said. “This downward adjustment in prices is not a very drastic and sharp drop. That would add to the stability of the market.”

Elsewhere in the region, he said the “big growth markets” for the bank are Indonesia, the Philippines and Malaysia. Standard Chartered, which employs 30,000 people in South-east Asia, is “keen to participate” in the Myanmar banking sector when it’s opened to foreign lenders, he said. The bank has a representative office in Yangon.


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