SINGAPORE (Jan 16): Singapore home prices are expected to show moderate growth of 2% in 2019 and 3% in 2020, according to Fitch Ratings in its 2019 Global Housing and Mortgage Outlook report.

Last July, Singapore raised the additional buyer’s stamp duty on purchases other than first homes for Singapore residents by an additional 5-10ppt and tightened various LTV limits each by 5ppt, including to 75% for first homes and 45% for second homes. These moves were aimed at cooling the property market as home price growth had begun to accelerate again.

This year, rising mortgage rates should further temper property price inflation but there will still be upward price pressure as household income is expected to continue to grow faster than home prices, which will improve affordability, says Fitch, the global credit ratings and research agency.

Fitch also expects the housing NPL ratio to rise to 0.7% in 2020 from the 0.4% projected for 2018 as Singapore mortgage rates continue to climb. Mortgage rates in this primarily floating-rate market are expected to follow the policy rate, which should be influenced by further US rate rises, as short-term rates in Singapore and the US have historically shown a fairly strong correlation.

“However, we expect any increase in delinquencies to be limited due to support from rising household incomes, a tight labour market and strong household balance sheets,” says Fitch which is forecasting the unemployment rate to remain low at 2% in 2019 and 2020.

In December, private-home sales in Singapore halved from the month prior as developers marketed fewer projects and buyers decamped from the city-state on holiday, the Urban Redevelopment Authority said in a statement on Tuesday.

Developers sold 602 units last month versus 1,201 in November. That took the 2018 sales tally to about 9,246. The total number of apartments launched for sale in December was 101, compared with 1,342 in November.

The decline did not come as a surprise as December is typically a slow month for sales because buyers are away for Christmas and school holidays. Even so, sales in December were the most for that month since 2012.

Although project launches were few, home builders managed to sell more apartments in developments that were launched in November, such as Parc Esta and Whistler Grand.