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Singapore Home Prices Post First Decline in Seven Quarters

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Buildings in Singapore
Commercial and residential buildings stand in Singapore. Photographer: Brent Lewin/Bloomberg

Jan. 2 (Bloomberg) -- Singapore’s fourth-quarter home prices slid for the first time in nearly two years, trimming annual gains to the smallest since 2008 as housing loan curbs cooled prices in Asia’s second-most expensive housing market.

The island-state’s private residential property price index fell 0.8 percent to 214.5 points in the three months ended Dec. 31, after it added 0.4 percent in the third quarter, according to preliminary figures released by the Urban Redevelopment Authority today. The index drop was the first since the first quarter of 2012. Prices increased by 1.2 percent in 2013, lower than the 2.8 percent gain in 2012, the data showed. That’s the smallest annual increase since prices slid 4.7 percent in 2008, the data showed.

Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a campaign that started in 2009 to curb speculation in the property market. Singapore unveiled new rules in June governing how financial institutions grant property loans to individuals, in addition to previous curbs including new taxes and higher down-payments.

“The loan measures have been very effective, it has cut off financing for home purchases,” said David Neubronner, national director at broker Jones Lang LaSalle Inc.’s residential project sales in Singapore. “The government has achieved what it set out to do.”

Home prices could decline as much as 10 percent this year, Neubronner said, adding that he doesn’t expect further measures from the government.

Shares Rise

The index tracking 50 property-related stocks in the city rose 0.1 percent to 708.74 at the close in Singapore. The gauge fell 10 percent last year, compared with a 48 percent increase in 2012.

The new loan framework requires lenders take a borrower’s debt into consideration when granting mortgages, the Monetary Authority of Singapore said June 28. Home loans should not lead to a borrower’s total debt-servicing ratio rising above 60 percent and those that do will be considered imprudent, it said.

Resale prices of luxury apartments, which were unchanged for four straight quarters, dropped 2 percent in the fourth quarter, DTZ Research said in a statement today. Foreigners bought only 18 condominiums that cost more than S$5 million ($3.9 million) in the second half, compared with 31 of these homes in the resale market in the first six months of the year, the property brokerage said.

Slowing Growth

Mortgage loan growth at 11.9 percent in October was at the slowest pace since Aug. 2009, data compiled by Bloomberg based on MAS figures showed.

Apartment prices fell 2.2 percent in prime districts in the fourth quarter after sliding 0.3 percent in the previous three months, the URA data showed. Those in the suburbs slid for the first time since June 2009, falling 0.6 percent, compared with a 2.2 percent gain in the previous quarter, according to the data.

Singapore’s economy shrank for the first time in five quarters in the three months to Dec. 31. Gross domestic product fell an annualized 2.7 percent in the period from the previous quarter, when it expanded a revised 2.2 percent, the trade ministry said in a statement today. Singapore’s construction industry contracted 6.9 percent, the data showed.

Home sales rose 13 percent in November from a year ago, as developers marketed new projects, ending four months of declines. Sales rose to 1,228 units compared with 1,087 in November 2012, according to data from the Urban Redevelopment Authority released last month.

Sales of new private homes could drop to 15,000 units in 2013 from 22,197 in 2012, according to Desmond Sim, associate director at CBRE Research.

To contact the reporter on this story: Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editor responsible for this story: Iain McDonald at imcdonald7@bloomberg.net

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