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Singapore Home Prices Post Longest Losing Streak in 5 Years

Photographer: Nicky Loh/Bloomberg
Residential buildings stand in the Grange Road area of Singapore.

Singapore’s home prices slid for a third consecutive quarter, the longest losing streak in five years, as tighter mortgage measures cooled demand in Asia’s second-most expensive housing market.

An index tracking private residential prices fell 1.1 percent to 209.3 points in the three months ended June 30, following a 1.3 percent decline in the previous three-month period, according to preliminary data released by the Urban Redevelopment Authority today.

Declines may deepen as the government extends a campaign to cool prices that started in 2009, with Chesterton Singapore Pte forecasting they will drop as much as 8 percent this year. Singapore last June capped the amount individuals are able to borrow, adding to measures that included new taxes and higher down-payments.

“The price moderation last quarter was lower than expected, which probably means that the measures are here to stay for now,” said Donald Han, managing director of Chesterton Singapore Pte, a real estate consulting company. “It’s a healthy correction though volumes have dropped by half since the loan measures last year.”

The FTSE Strait Times Real Estate Index lost 0.8 percent at the close of trading in Singapore, its lowest since April 16.

Photographer: Nicky Loh/Bloomberg

Housing in the Redhill area of Singapore. Close

Housing in the Redhill area of Singapore.

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Photographer: Nicky Loh/Bloomberg

Housing in the Redhill area of Singapore.

More Successful

The curbs in the Southeast Asian nation are proving more successful than other parts of the world where policy makers are trying to rein in asset prices, according to Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore.

Countries including New Zealand, China, the U.K., Canada and Norway are seeking the right policy mix to deflate potential housing market excesses, with some taking steps that limit credit rather than rely solely on rate increases.

“The measures in Singapore are working,” said Pandey. “The government has been able to implement and enforce the measures very effectively compared to say China where it has been difficult to enforce.”

The Singapore government may start relaxing the curbs that were aimed at controlling demand after it see a more meaningful decline of 8 percent to 10 percent in property prices, he said.

Falling Prices

Apartment prices fell 1.5 percent in prime districts in the second quarter after sliding 1.1 percent in the previous three months, the URA data showed. Those in the suburbs dropped 1.1 percent, compared with a 0.1 percent decline in the previous quarter, according to the data. Prices in areas near prime districts slipped 0.6 percent, compared with a 3.3 percent decrease in the previous quarter, the data showed.

Under the new loan framework, mortgages shouldn’t push a borrower’s total debt-servicing ratio above 60 percent and those that do will be considered imprudent, the Monetary Authority of Singapore said in June 2013.

Mortgage loan growth at 7.6 percent in May was the second-slowest pace since June 2007, data compiled by Bloomberg based on MAS figures showed.

A slew of property measures have raised concerns among those in the industry. Singapore could lose its competitive edge as an investment destination unless the government reviews its property cooling measures, the Straits Times newspaper reported, citing Kwek Leng Beng, executive chairman at City Developments Ltd., the country’s second-largest developer.

Home prices added 1.1 percent in 2013, lower than the 2.8 percent gain in 2012 and the smallest annual increase since 2008 when prices slid 4.7 percent.

Singapore’s home sales rose in May to 1,470 units, highest in almost a year, from 749 units in April, as developers marketed new projects amid declining prices, a government report showed last month. Sales of new private residential units may decline to between 10,000 and 12,000 units this year from about 16,000 last year, Han said.

Singapore was the most-expensive city to buy a luxury home in Asia after Hong Kong, property broker Knight Frank LLP said in an annual wealth report.

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: Andreea Papuc at apapuc1@bloomberg.net Tomoko Yamazaki, Linus Chua

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