Housing prices in Singapore are expected to fall by 10 to 15 percent this year exceeding the 10 percent drop forecasted by property analysts, according to Piyush Gupta, Chief Executive Officer of DBS Bank who was quoted in the media.
However, the decline will have no material impact on the bank’s loan book, he said during DBS’ Q4 results briefing.
Specifically, luxury home prices are expected to fall by 15 percent while the lower-end of the market will likely see a 10 percent decrease.
“All our stress tests in the past have shown that we can easily withstand a 20 percent reduction in Singapore property prices without material impact on our portfolio. We stress-test (for a) 20 (percent fall in property prices), but don’t expect it to happen; our stress tests are always calibrated to go off the charts. My own sense is that there will be a correction of 10-15 percent,” Gupta said.
He noted that the property market is already stabilising with the froth fading off. If this scenario continues, Gupta believes that the government may scale back some of the macro prudential measures.
He compared Singapore’s property market to that of London and New York, where property prices managed to hold up even during the 2008 global financial crisis. This is because demand in these cities is not dependent on the state’s domestic economy.
Notably, property prices in New York fell by 10 percent while the rest of the US saw prices drop by around a third.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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