CapitaLand, City Developments Drop as Singapore Imposes Curbs on Mortgages

CapitaLand Ltd. and City Developments Ltd. led declines among Singapore’s homebuilders amid concern the government’s latest effort to curb speculation in the housing market will hurt genuine demand.

“The mass-housing segment will be the hardest hit,” said Wilson Liew, an analyst at Kim Eng Holdings Ltd. “We’re expecting mass market prices to drop as much as 5 percent in the next 12 months.”

Singapore yesterday increased down payments for second mortgages and imposed a stamp duty on property held for less than three years to curb speculation after home prices surged 38 percent in the second quarter. The move comes after Hong Kong and China introduced measures to avert asset bubbles in their housing markets.

Buyers who hold more than one mortgage can only borrow up to 70 percent of a property’s value, versus 80 percent previously, and must pay 10 percent in cash, up from 5 percent, the government said in a statement. A seller’s stamp duty will apply to all residential units and land sold within three years of purchase, up from one year.

CapitaLand, Southeast Asia’s biggest developer, dropped 1.8 percent to S$3.91 as of the 12:39 p.m. midday break in Singapore. City Developments, the island’s second-largest developer by market value, fell 3.3 percent to S$11.08. It’s the biggest decliner on benchmark Straits Times Index, which fell 0.7 percent.

Property prices have surged as Singapore’s $182 billion economy rebounded from last year’s global slump to expand at a record 17.9 percent pace in the six months through June.

The city-state has been attempting to rein in home prices since last year when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built.

The government in February said it will levy a seller’s stamp duty on all residential properties and land that are sold within one year from the date of purchase. The city-state then also lowered the loan-to-value limit to 80 percent from 90 percent for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore.

The island nation’s Prime Minister Lee Hsien Loong said on Aug. 29 previous measures failed to keep prices in check.

“We twice attempted to cool the property market, once last year and once in February this year, but the prices are still rising,” Lee said in a televised speech. “Our purpose is to make sure in the long term, Singaporeans can own their homes and afford it and it will be a gradually appreciating asset which will grow as Singapore grows.”

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

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