CapitaLand Ltd. fell to the lowest in three months, leading declines among the city’s property stocks, on speculation the government will introduce additional measures to cool the housing market.
Southeast Asia’s biggest developer sank as much as 3.5 percent to S$3.60 and closed at S$3.62 in Singapore, the lowest finish since Dec. 6. City Developments Ltd., the city’s second-largest developer, fell 1.8 percent to S$11.20. Wing Tai Holdings Ltd. dropped 2.3 percent to S$1.90. The benchmark Straits Times Index slipped 0.3 percent.
Singapore, Hong Kong and China have been grappling with a surge in housing prices fueled by low interest rates and capital inflows that drive up demand and make housing unaffordable. CapitaLand gets 35 percent of sales from Singapore and 18 percent from China, according to data compiled by Bloomberg.
“There is concern about further residential measures in Singapore,” said Tim Gibson, Head of Asian property equities at Henderson Global Investors Ltd., which manages about $98 billion globally. “CapitaLand also has some exposure to China where we have seen policy measures to curb the property market.”
Singapore Finance Minister Tharman Shanmugaratnam said on Feb. 25 the government plans to raise taxes for luxury home owners and investment properties, widening a four-year campaign to curb speculation. Hong Kong last month doubled the sales tax on property costing more than HK$2 million ($258,000) and targeted commercial real estate for the first time.
China on March 1 imposed its toughest curbs in a year, ordering the central bank to raise down-payment requirements and interest rates for second mortgages in cities with excessive price gains, enforcing a property sales tax and telling local governments with the biggest price pressures to tighten home-purchase limits.
Singapore home sales rose 43 percent in January from the previous month as buyers rushed to purchase homes right after the government announced cooling measures to ease residential prices. Prices in the island state reached a record high in the fourth quarter amid low interest rates, raising concerns of a housing bubble and prompting the government to introduce its seventh round of cooling measures on Jan. 11.
The government has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built.
PropertyGuru, a Singapore-based real estate website, said on March 6 the government may tighten rules for mortgage repayments, citing a person who wasn’t identified.
“Whatever the governments do, doesn’t seem to cool the property market,” said Jason Hughes, head of premium client management at IG Markets in Singapore. “Tightening measures are on the cards as housing prices stay at elevated levels.”