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• More macro prudential measures to curb speculation. Last Thursday, the Monetary
Authority of Singapore (MAS), Ministry of National Development (MND) and Ministry of
Finance (MOF) have jointly announced new property cooling measures aimed to curb
speculation. The authorities raised additional buyer’s stamp duty (ABSD) by 5ppt for the
second and subsequent residential properties. Loan-to-value (LTV) ratio for all new
housing loans was lowered by 5ppt.
• Developers will incur a higher ABSD of 25% if they fail to build and sell their projects
within five years, compared with 15% previously. They were also hit by an additional
ABSD of 5%, which is non-remittable and has to be paid upfront upon purchase of
residential property. These new rules are likely to dampen en-bloc transactions.
• Exposure to residential properties is substantial. DBS and UOB have more exposure
to Building & Construction at 19.6% and 22.3% of total loans respectively. OCBC and
UOB have more exposure to residential mortgages at 27.6% and 27.9% of total loans
respectively. Overall, UOB has the largest exposure at 50.2% on an aggregate basis,
followed by OCBC at 44.3%. Traditionally, delinquency for residential mortgages is
extremely low and current NPL ratio is just 0.4%.
• Residential properties not a catalyst for loan growth. The recent recovery in
residential properties was relatively mild and short-lived. Property price index for nonlanded
properties gained just 9.4% in 2H17 and 1H18, compared with a four-year rally of
56.2% (2010-13) after the correction triggered by the Global Financial Crisis. The volume
of private residential properties sold by developers contracted 41.2% yoy to 4,461 units
in 5M18. Understandably, loan growth for Building & Construction and residential
mortgages were lacklustre at 1.4% and 4.8% yoy respectively in May 18. Thus, the
current pre-emptive strike to smother the buying frenzy and en-bloc fever would only
have a moderate impact on loan growth compared with previous rounds of cooling
• Past cooling measures have already curbed investment demand. Homes purchased
for owner occupation accounted for the lion’s 72.8% share of new housing loans limit
granted in 4Q17. Banks are not reliant on homes purchased for investment.
• No lasting damage from cooling measures. We reviewed how banks’ share prices
responded to previous rounds of cooling measures. We observed that banks’ share
prices corrected by 1-4% within the first week during the cooling measures implemented
in Dec 11 and Jan 13. The exception was DBS who was particularly hard hit with a
correction of 7.5% in the first week after cooling measures were introduced in Dec 11.
Most losses reversed to gains after three months.
Source : UOB KayHian Research
Singapore Banking – Past Cooling Measures Have Already Tamed Investment Demand
Shared By Stock Fanatic on Tuesday, July 10, 2018 | 10.7.18
Posted on Tuesday, July 10, 2018 |
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