Property shares fall sharply on tighter home loan rules

Shares of Singapore property developers posted sharp falls yesterday as the market gave its first reaction to the tighter rules on home loans brought in by the Government to help curb the continued upward pressure on residential prices.

CapitaLand fell 3.3 per cent, City Developments dropped 2.3 per cent and Keppel Land lost 1.7 per cent. The Straits Times Index lost 1 per cent.

Analysts said there was an element of a knee-jerk reaction to the latest cooling measures and the sharp falls in share price do not mean that investors believe the new home loan rules will necessarily have a big impact on the property market.

OCBC Investment Research said that other key drivers, such as low forward rates, easy loan access and healthy system liquidity will likely continue to support housing demand, while adding that the latest cooling measures will have a somewhat muted impact on equities and physical prices.

“Of course we’d expect the property counters to come down, but it’s not as much relative to what we saw with the previous measures in December when the higher stamp duty was brought in,” said OCBC Investment Research’s property analyst Eli Lee.

However, DBS Vickers Securities thinks real estate investment trusts may come into greater focus as a result of these latest measures.

“We believe investors will continue to adopt a defensive strategy ahead of the year end and expect S-REITS to outperform relative to developers post this tightening,” DBS Vickers Securities said in a research note.

Source : Today – 9 Oct 2012

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