Singapore’s central bank said the nation’s property market was stabilizing, as government data showed home sales falling to a four-year low.
Annual home sales dropped 33 percent to 15,301 units last year, data released yesterday showed. New housing loans have declined and household balance sheets are strong, the Monetary Authority of Singapore (MAS) wrote in an e-mailed statement after a Forbes article this week said the city was headed for an “Iceland-style meltdown.”
Singapore unveiled new rules last year governing how financial institutions grant property loans to individuals, in addition to previous curbs, including new taxes and higher downpayments. 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 Asia’s second-most expensive housing market.
“The government and MAS have taken decisive steps to cool property demand and prevent excessive leverage,” the central bank said. “Singapore’s banks are resilient, with strong financial and capital positions.”
Singapore’s home sales plunged 82 percent to 259 units last month from a year ago, the lowest since January 2009.
Record home prices amid low interest rates had raised concerns of a housing bubble and prompted the government to widen the campaign that started in 2009 to curb speculation in the property market.
“The measures have impacted sales last year especially after the loan curbs in June,” said Lay Keng Lee (李來慶), head of Singapore research at DTZ. “We don’t see a rollback of the measures yet as it is too early for that, so sales may decline to between 12,000 and 15,000 units this year.”
Iceland’s economy was pushed into recession when its three largest banks defaulted on US$85 billion within weeks of each other in October 2008. The meltdown forced the government to seek a bailout from the IMF and implement capital controls.
“The central bank here has been more wary of excessive lending since the 1998 financial crisis,” said Song Seng Wun (宋城煥), an economist at CIMB Group Holdings Bhd in Singapore. “The risk of Singapore heading in the direction of Iceland is extremely unlikely and there are enough analysts from reputable investment banks and credit-rating agencies on the ground here to flag that if such a risk were to emerge.”
The city-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 earlier this month.
The index drop was the first since the January-to-March quarter of 2012. Prices increased 1.2 percent last year, lower than the 2.8 percent gain in 2012, data showed. That is the smallest annual increase since prices slid 4.7 percent in 2008, the data showed.