Singapore Home Prices May Fall More: Standard Chartered

Singapore’s home prices will probably fall further before the housing curbs introduced in the past five years are scaled back, Standard Chartered Plc (STAN)’s Southeast Asia head said.

“You would start to take away some of these measures if price growth reaches a certain level of equilibrium,” Lim Cheng Teck, chief executive officer for Asean or the Association of Southeast Asian Nations, said in an interview in Singapore 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.

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

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

Private yachts are berthed outside luxury homes and condominium apartments at Sentosa Cove in Singapore. Photograph: Munshi Ahmed via Bloomberg Close

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Private yachts are berthed outside luxury homes and condominium apartments at Sentosa Cove in Singapore. Photograph: Munshi Ahmed via Bloomberg

Too Early

“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 their fingers won’t be pressing any buttons at this point in time.”

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

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

An index tracking private residential prices fell 1.3 percent in the first quarter, following a 0.9 percent 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 percent in March, the slowest pace since June 2007, according to central bank data.

Photographer: Munshi Ahmed/Bloomberg

A man walks past a billboard advertising CapitaLand Ltd.'s Bedok Residences in Singapore. CapitaLand, Singapore’s biggest developer, said in February that the government may start easing some of its property measures if home prices drop between 5 percent and 10 percent this year. Close

A man walks past a billboard advertising CapitaLand Ltd.'s Bedok Residences in... Read More

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Photographer: Munshi Ahmed/Bloomberg

A man walks past a billboard advertising CapitaLand Ltd.'s Bedok Residences in Singapore. CapitaLand, Singapore’s biggest developer, said in February that the government may start easing some of its property measures if home prices drop between 5 percent and 10 percent this year.

The curbs “really prevented the bubble from forming,” Standard Chartered’s 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, Lim said the “big growth markets” for the bank are Indonesia, the Philippines and Malaysia. Standard Chartered, which employs 30,000 people in Southeast 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.

To contact the reporters on this story: Sanat Vallikappen in Singapore at vallikappen@bloomberg.net; Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Andreea Papuc at apapuc1@bloomberg.net Linus Chua, Colin Keatinge

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