Home loans rise despite fall in sales

Most indicators are pointing to a gradual moderation in the property market here, but latest figures showing a 1.4 per cent month-on-month growth in home loans have some analysts wondering if the outlook is quite so clear cut.

Latest figures from the Monetary Authority of Singapore showed that building and construction loan growth in May fell 13 per cent month-on-month to S$59 billion.

New private home sales also declined 13 per cent from April to 1,575 units in May.

The Urban Redevelopment Authority’s private residential property price index also showed that private home prices have been moderating for seven consecutive quarters.

However, home loans increased by 1.4 per cent in May to S$119.7 billion, representing a 0.3 percentage-point rise after falling 0.2 percentage-point in the previous month, suggesting that investors could still be bullish on the property market.

Some analysts expect home loan growth to remain firm for the rest of the year, prompting possible further cooling measures.

Mr Song Seng Wun, regional economist, CIMB, said: “We’ve seen a pick up in the lending into the broader market with the May figures. If we also see that in June and July, despite signs out there pointing to perhaps a moderation in economic growth, then I think it will suggest the Government ought to do a bit more in terms of cooling down sentiment.”

For now, the growth in home loans looks likely to stay. But external developments such as debt issues in the United States and the euro zone could affect sentiment in the property market.

Source : Today – 7 Jul 2011

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