Singapore is seeing an unprecedented mortgage slowdown

Singapore is seeing an unprecedented mortgage slowdown

By: 
Bloomberg
25/01/19, 07:17 am

SINGAPORE (Jan 25): Rising interest rates and the latest round of property curbs have put the brakes on mortgage demand at Singapore’s banks, potentially further dragging down the city’s housing market.

Home-loan growth slowed to 1.9% in the first 11 months of 2018, less than half the 4.2% increase posted in 2017, the latest Monetary Authority of Singapore data show. Mortgage growth will stay stuck below 2% this year, according to Diksha Gera, an analyst at Bloomberg Intelligence.

The credit slowdown threatens to further accelerate the decline in residential prices, which fell for the first time in six quarters in the final three months of last year. Housing values may drop as much as 3% this year, and new home sales might plunge 20%, according to Derek Tan, a real estate analyst at DBS Group Holdings Ltd.

A surge in housing supply, rising mortgage rates, a China-led economic slowdown and volatile financial markets are all weighing on sentiment, said Royston Foo, an independent property analyst who publishes on Smartkarma.

“I expect the overall property market outlook to be weaker in 2019,” Foo said. “Insecurity and bearish sentiment will result in potential buyers holding back purchases and adopting a wait-and-see approach.”

The latest property curbs announced in July hit mortgage demand, DBS Chief Executive Officer Piyush Gupta said earlier this month. The bank’s Singapore mortgage book grew less than $2.5 billion in 2018, compared to the $4 billion initially anticipated at the start of the year, he said.

Still, the drop in lending growth won’t necessarily dent earnings at Singapore’s three biggest banks, because recent increases in mortgage rates will buffer interest income. DBS, Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. have raised home loan rates an average 20 basis points in the past three months to just above 2%, and they may climb to 3%, according to Nomura Holdings Inc. analyst Marcus Chua.

DBS undergoes target price cuts after a record FY18, but remains a 'buy'

SINGAPORE (Feb 19): Jefferies Singapore, OCBC Investment Research and RHB Research are maintaining their “buy” calls on DBS Group while lowering their price targets to $28.50, $29.31 and $28.80, respectively. This comes after the release of its 4Q18 results, which saw earnings grow 8% y-o-y to $1.32 billion to bring the bank’s earnings for the full year to a record high of $5.63 billion. In a Tuesday report, Jefferies analyst Krishna Guha says he has lowered his FY19-20 earnings per share (EPS) estimates on the back of reduced loan and non-interest growth, although valuations remai....
Read More >>

Winners and losers from Singapore's budget as election looms

SINGAPORE (Feb 19): Singapore Finance Minister Heng Swee Keat boosted health-care and military spending, gave tax rebates to citizens and tightened rules on foreign workers ahead of an election that could come as early as this year. Heng announced a new $8 billion support package for seniors in his budget speech on Monday, as well as measures to help local businesses adopt new technologies. The expansionary fiscal plan will push the overall budget deficit to 0.7% of gross domestic product in the year ending March 2020, from a revised surplus of 0.4% this year. The finance minister opened....
Read More >>

Sasseur REIT FY18 DPU exceeds IPO forecast by 12.6%

SINGAPORE (Feb 18): The manager of Sasseur REIT announced a 4Q18 DPU of 1.999 cents, 28.1% higher than forecast. This also brings 2H18 DPU to 3.541 cents and FY18 DPU to a total of 5.128 cents. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in China through its initial portfolio of four quality retail outlet mall assets. 4Q18 distributable income came in at $23.6 million, 28.1% higher than forecast while EMA rental income came in 1.6% higher than forecast at $31.2 million. Based on the Feb 18 closing unit price of $0.71,....
Read More >>