Singapore private home prices to rise by about 2% in 2020 and 2021: Fitch Ratings

Fitch Ratings see Singapore private residential prices growing by around a "modest" 2 per cent in both 2020 and 2021, about the same as this year and down from nearly 8 per cent in 2018.

"Private home prices declined by 0.7 per cent from the third quarter of 2018 and the first quarter of 2019 after the July 2018 property cooling measures and mortgage rate increases, which both dampened market sentiment. Prices rebounded slightly in the second quarter of 2019, and Fitch Ratings projects minor growth for the rest of this year." Fitch Ratings said in its Global Housing and Mortgage Outlook 2020 report out on Wednesday (Dec 18).

But it added that: "If the government views home prices as rising more than is justified by economic fundamentals, we expect the government would again cool the market through macro-prudential measures."

Fitch Ratings said it does not expect an increase in Singapore mortgage rates in the near future, which would support borrowers' ability to pay. Home loan rates rose rapidly to 2 per cent at the end of the first half of this year due to a sharp rise in benchmark rates such as the three-month Singapore Interbank Offered Rate or Sibor. For banks, Fitch Ratings forecasts mortgage lending growth to remain weak in the near term.

"After a projected small decline of 0.5 per cent in 2019, we expect 2 per cent annual growth in each of 2020 and 2021 in line with improving market sentiment. The lending growth slowdown in 2019 reflected the increase of the additional buyer's stamp duty and tightening of loan-to-value limits in July 2018." it said.

Ref: Property Report