Singapore's new home-loan rules are meant to curb imprudent borrowing rather than cool the real-estate market, says CIMB analyst Donald Chua in a note.
From Saturday, Singapore's central bank is discouraging property loans that result in individual borrowers using more than 60% of their monthly incomes to service debt, and closed loopholes that allowed some homeowners to reap financial benefits from using family members to buy additional property.
"While more marginal buyers will be removed from the equation and demand will continue to moderate, we believe that a housing collapse is unlikely," Chua says. "Our checks show that leverage in the system is not stretched and affordability is still sound."
CIMB stays Overweight on Singapore's property sector and sees "any kneejerk reaction to the news as a buying opportunity." Already, property stocks are taking hits and leading the STI lower.
Hongkong Land (H78.SG) slides 2.6% to US$6.69, while CapitaLand (C31.SG) drops 2% to $3.02. City Developments (C09.SG) is down 1.2% at $10.57.
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