Business Times: Sat, Nov 19
THE number of property deals and quantum of new housing loans fell after the last round of cooling measures on Jan 13, says the Monetary Authority of Singapore (MAS) in its latest Financial Stability Review report.
The report, released yesterday, noted that new housing loans fell to $12.4 billion in Q3 2011, from $13.4 billion in Q1, while outstanding housing loan growth has eased, to 18 per cent year-on-year in Q3, from 23 per cent in Q4 2010.
And the share of outstanding housing loans with loan-to-value ratios above 80 per cent has fallen from a peak of 17.3 per cent in Q3 2009 to 4.9 per cent in Q3 2011 - the lowest since 2004.
The January 2011 policy action also led to a sharp 16 per cent drop in the number of property transactions in Q1 2011. Transactions recovered in Q2 2011, but have since eased to an average of about 2,600 units per month in Q3 2011 - about 19 per cent lower than the monthly average in 2010.
The key drivers behind the moderation are decreases in both resale and sub-sale activities.
Compared with 2010, average monthly resale transactions in Q3 2011 have slowed by about 36 per cent. Sub-sale activities, as a share of total transactions - seen as a proxy for speculative activity - were around 7 per cent in Q3 2011, lower than the quarterly averages of about 11 per cent and 9 per cent observed in 2009 and 2010 respectively.
'The policy measures taken by the government appear to have dampened the momentum in the private residential property market somewhat,' MAS said.
The central bank also noted that the series of measures to cool the property market - announced in phases from September 2009 to January 2011 - appear to have had a tempering effect on housing loan growth.
But despite the global economic uncertainties, new sales of private residential units by developers remain firm, MAS said. 'Global liquidity conditions remain flush and the search for yield is likely to continue. In addition, Singapore may be viewed as a safe haven which could attract investments into the residential property market.'
New sales activity has remained relatively firm, except for the contraction immediately following the January 2011 measures. Cumulative new sales for the first three quarters of this year reached about 12,300 units, up slightly from the 12,100 units sold over the same period last year. New sales for the full year are expected to match 2010's volume.
Nevertheless, the risk of market volatility in the medium term has risen, on the back of the risk of a sharper-than-expected global economic slowdown and the potential for housing supply in the pipeline to build up, MAS warned.
It reiterated that the government will continue to be vigilant in monitoring developments in the property market and will, if necessary, adopt additional measures.
Analysts have turned more bearish on the private housing market in recent weeks as unsold inventory builds up.
Daiwa Capital Markets this week downgraded its view on the sector to 'negative' from 'neutral', and now expects a residential market downturn from end-2011 to end-2014 with prices declining by 22-26 per cent.
Daiwa's analysts warned that 'structural issues' (rising levels of unsold inventory due to robust launch schedules coupled with a formidable pipeline of completions) will continue to depress rents and capital values.
Nomura Equity Research also said in a new report yesterday that it foresees a significant inventory build-up in the private housing market in 2012.
The firm noted that the build-up in unsold inventory of non-landed units in launched private residential projects accelerated in Q3 2011, rising 9.8 per cent quarter-on-quarter to 4,841 units. This compares with an increase of 8.4 per cent quarter-on- quarter in Q2. The unsold inventory is now 43 per cent higher than the 3,383 units at the end of 2010.
Source: Business Times © Singapore Press Holdings Ltd
Martin Koh/ Sherry Tang