Singapore Quarterly Home Price Has First Drop in Two Years

Singapore’s fourth-quarter home prices slid for the first time in almost two years, trimming annual gains to the smallest since 2008 as mortgage curbs cooled prices in the Southeast Asian city.

The private residential property price index fell 0.9 percent in the three months ended December, more than the 0.8 percent drop based on preliminary data announced on Jan. 2. The decline in suburban housing values was 1 percent, more than the 0.6 percent slide in the earlier report, according to a government statement today.

“The data means that in the last three weeks of December, the price decline accelerated in the suburban market,” said Nicholas Mak, executive director and head of research at property consultants SLP in Singapore. “We have to wait for another quarter to see if suburban prices continue to weaken, and if they do, it will set the tone for 2014.”

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.

‘Cooling Measures’

The decline in apartment prices in prime neighborhoods was 2.1 percent in the fourth quarter, according to the statement, compared with the 2.2 percent decrease in the preliminary report. Rents fell 0.5 percent in the fourth quarter, the first drop since the quarter ended Sept. 2009, the data showed.

Housing values gained 1.1 percent in 2013, according to the statement, the smallest annual increase since prices slid 4.7 percent in 2008.

“The government’s cooling measures have impacted buying sentiment and the capacity to obtain mortgage loans,” said Alice Tan, head of consultancy and research at broker Knight Frank LLP in Singapore.

The new loan framework requires that 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.

Private home sales fell to 14,948 units last year from 22,197 in 2012, the data showed. Resale transactions of homes dropped by half to 6,608 units from 13,214 in 2012.

“There’s some investor fatigue coming in with the hefty measures,” Mak said. “That will clean off a lot of the investor demand.”

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