Singapore developers fell, led by CapitaLand, after the government restricted home-loan maturities in a bid to curb a housing bubble as property prices in the island-state rose to a record.
CapitaLand, Southeast Asia’s biggest developer, dropped 2.7% to $3.21 as of 9:26 a.m., heading for its biggest drop in three months. Keppel Land, the developer partly owned by the world’s largest oil-rig builder, slid 0.8% toS$3.53. City Developments, Singapore’s second-largest developer, fell 1.3%.
The maximum tenure for new residential property loans will be capped at 35 years, the Monetary Authority of Singapore said in an e-mailed statement on Oct 5. It will also impose tighter loan-to-value limits for loans exceeding 30 years, it said. The rules, which became effective Oct 6, will apply to both private properties and Housing Development Board flats.
“It’s a knee-jerk reaction to the measures announced,” Wilson Liew, Singapore-based analyst at Maybank Kim Eng Holdings, said in a phone interview. “The measures are more preemptive and may weed out marginal buyers in the mass market segment. I don’t see a significant impact on demand.”
The government has been trying to rein in residential property prices since 2009. It has barred interest-only loans for some housing projects, stopped allowing developers to absorb interest payments, imposed additional taxes on foreigners and companies buying properties, and moved to curb the increasing trend of so-called shoebox apartments.
Over the past three years, the average tenure for new residential property loans has increased from 25 years to 29 years, the MAS, the island-state’s central bank, said. More than 45% of new home loans had durations that exceeded 30 years, it said.
Singapore home prices climbed to a record in the third quarter after developers sold more homes. The island-state’s private residential property price index rose 0.5% to 208 points in the three months ended Sept. 30, according to preliminary estimates released by the Urban Redevelopment Authority on Oct 1. The index advanced 0.4% in the previous quarter, which was also at a record.
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