Home prices may drop 15% this year: DBS CEO

[CityFarmer]

From another stakeholder's view, the lender...

Home prices may drop 15% this year: DBS CEO

SINGAPORE — Singapore home prices may fall by 10-15 per cent this year as government cooling measures and tougher limits on borrowing continue to dampen the property market, DBS CEO Piyush Gupta said today (Feb 14).

“The top-end of the market is likely to be 15 per cent, the lower-end more likely 10 per cent. The quantum and extent of correction will obviously be equally a function of the government and MAS (Monetary Authority of Singapore) tweaking the macroprudential policies,” he said at a briefing on DBS’s results for the fourth quarter of 2013.

Mr Gupta’s views were more bearish than that of most property analysts, who see home prices declining by 5-10 per cent.
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http://www.todayonline.com/business/home...ar-dbs-ceo

[felixleong]

Seems like a lot of fear in the property market, everyone echo-ing bear bear bear

[opmi]

govt should know drop 10-15%. won't die one.
Price drop is best way to kill off animal spirits.

[greengiraffe]

When people make $, noone complains. A correction can only be good for the messes as a whole since I have never seen such a defying mkt following uncountable number of measures.

Anyway, any big changes in anti-speculation measures won't happen until after the next GE.

[chialc88]

When the price drop 10%, property developer will peng san.

Followed by the bank when the price drop 20%.




A Life not Reflected is a Life not Worth Living.

[safetyfirst]

When the price drop 10%, property developer will peng san.

Followed by the bank when the price drop 20%.

I think it is true for some developers, i think it is not true for the local banks. At worst, the banks will make less money but unlikely to incur a loss

[potatolover]

As long as there is normal economic growth and no widespread foreclosure , unlikely to drop even 10% . Our Garment know best what to do ... Haha

[nsengkia]

Given his views, the recent easing of TDSR may not work out if the borrower LTV is too high. Too risky for a new bank to refinance and end up being the one holding the baby (foreclosed property) especially for HDB flats. What do you guys think?

[Ben]

I have superficial knowledge about the dynamic of property market, but IMHO, a price drop of 10-15 per cent is not likely in view of the current global/regional economy and full employment situation in Singapore.

1. Our govt wants a stabilize property market that corresponds with economic growth. I don’t think they want to see a significant and rapid price correction. It is not good for them in terms of government revenue (revenue drops and so may have to increase taxes elsewhere to balance the budget), and is also not good for many property owners in Singapore (how to answer to them in the next election?). Govt have rolled out 7 rounds of cooling measures so far, and so can easily roll back some of these measures to support the market when needed. The recent exemption to TDSR, though is not a U turn to the cooling measures, is nevertheless viewed as govt intention to see a soft landing.

2. If price drops more than 10%, it will nullify the effect of ABSD. This could attract rich foreign buyers to flock back to Singapore again. Singapore is still a very attractive location to these rich investors. And don’t underestimate the numbers of HNWI in Singapore who are at the sidelines waiting for price to drop.

According to a Credit Suisse report published in The Edge, it says that residential property price will fall no more than 5% unless there is an external shock. In the past four decades, Singapore private property prices have fallen four times, all of which were triggered by external shocks – the oil crisis in 1985, the AFC, the dotcom crisis followed by SARS, and the GFC. Aside from these events, prices have not corrected beyond 5%.

If I were to make a wild guess, I think a likely and healthy correction is about 5 – 10 per cent.

[potatolover]

Tks Ben. Agreed with you.

it is more like people still want to buy but cannot get money becos of measures such as TDSR, etc.

Sellers also did not want to sell down their properties when they are still have a good job

In my humble view, max is 5% drop in 2014.

I have superficial knowledge about the dynamic of property market, but IMHO, a price drop of 10-15 per cent is not likely in view of the current global/regional economy and full employment situation in Singapore.

1. Our govt wants a stabilize property market that corresponds with economic growth. I don’t think they want to see a significant and rapid price correction. It is not good for them in terms of government revenue (revenue drops and so may have to increase taxes elsewhere to balance the budget), and is also not good for many property owners in Singapore (how to answer to them in the next election?). Govt have rolled out 7 rounds of cooling measures so far, and so can easily roll back some of these measures to support the market when needed. The recent exemption to TDSR, though is not a U turn to the cooling measures, is nevertheless viewed as govt intention to see a soft landing.

2. If price drops more than 10%, it will nullify the effect of ABSD. This could attract rich foreign buyers to flock back to Singapore again. Singapore is still a very attractive location to these rich investors. And don’t underestimate the numbers of HNWI in Singapore who are at the sidelines waiting for price to drop.

According to a Credit Suisse report published in The Edge, it says that residential property price will fall no more than 5% unless there is an external shock. In the past four decades, Singapore private property prices have fallen four times, all of which were triggered by external shocks – the oil crisis in 1985, the AFC, the dotcom crisis followed by SARS, and the GFC. Aside from these events, prices have not corrected beyond 5%.

If I were to make a wild guess, I think a likely and healthy correction is about 5 – 10 per cent.