Local banks reckon home prices will fall following the latest round of cooling measures.
Singapore banks expect home prices to fall along with home loan activity, following the introduction by the government of its latest round of property cooling measures.
UOB chief Wee Ee Cheong revealed that his “gut feel” is that home prices will fall 5.0 to 10 percent following the new measures, reported the Business Times.
More: Financial Guide On Affordability: TDSR
But while housing loan activity may also drop, he does not expect it to affect the bank’s home loans growth for now.
In fact, OCBC chief operating officer Ching Wei Hong, who also serves as the head of global consumer financial services for OCBC, still expects an overall mortgage growth of low to mid single-digit percentage for 2018.
This comes as there is no “complete collapse” of the property market, he said while noting that demand from first-time house buyers continued to be fairly resilient.
Nonetheless, Ching does not expect to “see the same exuberance” as the first half.
Singapore’s big three banks – UOB, OCBC and DBS – are bracing for a slower home loan activity in the coming years, given the new cooling measures by the government.
With the new measures expected to hit sentiment, DBS – which is Singapore’s largest mortgage provider – slashed its property loans growth forecast by $1 billion.
Reporting higher earnings for the second quarter ended 30 June, the three banks noted that the chill in the property market comes alongside a new type of cold war amid growing trade tensions between China and the US.
In Q2, DBS saw its net profit increase 18 percent to $1.33 billion, while UOB and OCBC’s net profit rose 28 percent and 16 percent to $1.08 billion and $1.21 billion respectively.
More: Can you afford a condo? Check your affordability now.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org