Home prices could drop by up to 15 per cent: DBS chief
February 24, 2014 Leave a comment
Home prices could drop by up to 15 per cent: DBS chief
Monday, Feb 17, 2014
Mok Fei Fei
The Straits Times
SINGAPORE – House prices could plunge by up to 15 per cent this year amid a softening property market, said DBS chief executive Piyush Gupta on Friday.
Mr Gupta also said that he expects property cooling measures to be wound back if prices start heading south.
His remarks, which came during a DBS results briefing, are a further sign that real estate could be in for a difficult year.
Mr Gupta told the briefing: “My own sense is that you’re looking at a correction of more than 10 to 15 per cent. I think the correction might not be consistent.”
He expects the luxury segment to take the biggest hit while mass market home prices may drop by about 10 per cent.
Mr Gupta also held out hope that cooling measures could be tweaked if values begin declining.
“If the market continues to stabilise and there’s this beginning of a correction, I would expect the central bank and the Government to start taking off, removing some of the macroprudential measures they put in,” he said. “And if they do, then that will create support to the extent of the drop-off in the housing market this year.”
His comments came as property players, including City Developments executive chairman Kwek Leng Beng, called on the Government to consider relooking some of the market measures. Curbs on mortgage loans, particularly the total debt servicing ratio framework introduced last June, have curbed sales and slowed price growth. Private home sale prices slipped 0.9 per cent in the fourth quarter last year while HDB resale prices declined 1.5 per cent.
A decline in prices is not expected to have a material impact on DBS’ earnings, noted Mr Gupta. The bank cleared a stress test that crunched its numbers through a scenario of a 30 per cent fall in home prices. Any potential threat to its housing portfolio would come from higher unemployment, since affordability of home purchases here depends on income levels, Mr Gupta said.
“In Singapore, it continues to be full employment, so we’re not seeing any stress on that count.”
About bambooinnovator
Bamboo Innovator 