The number of people getting mortgages in Singapore is drastically falling. According to Bloomberg, house loans in the country reduced from a 4.2% growth in 2017 to a mere 1.9% in 2018. This is a huge contrast from 1998’s 38.6% and 2010s 22.9%. Piyush Gupta, DBS CEO says that the bank’s housing loans reflected only S$2.5 billion in 2018, which is significantly lower than the projected value of S$4 billion.
Possible Reasons for the Decline
Perhaps one reason for this phenomenon is the soaring prices of properties in the country. The Demographia International Housing Affordability Survey reveals that property costs in Singapore are ‘seriously unaffordable,’ with a recorded median house price of 4.6. Property Guru clarifies that this indicates that Singapore’s median house prices are higher than the median household income by 4.6 times. Singaporeans expressed disappointment about the escalating costs, according to a survey made by Property Guru.
Aside from the Singaporeans disfavouring the unaffordable house costs, this decline can be attributed to the lack of interest in Singapore shown by foreign investors. Towards the end of 2018, MSN predicted that less and less foreign investors might capitalize on the city-state’s property market, precisely because of the extremely high prices.
Property Analyst Royston Foo also indicates surplus housing supply, increasing loan rates, economic slowdowns and volatile markets as contributing factors in this issue, says Bloomberg.
The Future of Singapore’s Housing Market
Foo is pessimistic about the property market for this year. Bloomberg analyst Diksha Gera foresees that the mortgage increase will remain under 2%. However, analysts say that 2019 will see housing prices come to a standstill, as the government imposed measures to curb the rising costs.
Meanwhile, experts predict a decline in new home sales, which can experience a 20% fall in 2019.