A sobering mix of property curbs, a softening economy and the prospect of higher interest rates seems to have cooled Singaporeans' fervour for property, both at home and abroad.
Singaporeans bought about $1.1 billion worth of overseas residential properties in the first half of this year, down from about $1.6 billion in the same period last year, the Monetary Authority of Singapore (MAS) said yesterday.
For the whole of last year, locals snapped up $3 billion worth of overseas homes, up from $1.9 billion in 2012.
"Nonetheless, real estate agencies in Singapore have seen increased interest in overseas property purchases, from across a broader spectrum of Singapore buyers," the MAS said in its latest Financial Stability Review.
Properties in Britain, Malaysia and Australia accounted for 91 per cent of total transactions by value in the first six months of this year and 76 per cent by number, the MAS said. Singaporeans also bought homes in Japan, the Philippines and Thailand.
The data is based on an MAS survey that collected figures on overseas properties transacted by real estate agencies in Singapore.
Getty Goh, the director of property research firm Ascendant Assets, said that he has seen a pullback in the number of Singaporean clients committing to foreign property this year.
"The market is less certain these days with things like stimulus tapering taking effect in the United States and an interest rate hike coming up," he said.
"On top of that, local investors see the Singapore market cooling and so they are actually saving their bullets as they anticipate that, at some point, they may want to re-enter the Singapore market when prices come down enough, rather than commit to an overseas property now."
Despite the strong take-up of foreign homes over the past few years, local banks' exposure to foreign property loans remained low, the MAS said, comprising less than 2 per cent of their total housing loan books.
At home, property cooling measures have also tempered the growth of outstanding housing loans, the MAS noted.
At its peak, property loans grew 23 per cent in August 2010 from the same month the year before. But in September this year, property loans grew just 6 per cent from a year ago.
The volume of new housing loans, which generally tracks housing transactions, contracted from $11.4 billion in the second quarter of last year to $6.7 billion in the third quarter of this year, the MAS added.
Singaporeans are also more prudent when taking out loans.
For example, the average tenure of new private housing loans has also declined, from 30 years in 2012 to 25 years in the third quarter of this year.
A slight uptick in the banks' non-performing loans (NPL) ratio from 0.28 per cent to 0.36 per cent between the first and third quarters of this year was due to "a handful" of defaults for high-end housing projects, the MAS said.
NPLs are bad loans.
United Overseas Bank said in its third-quarter results last month that overall NPL ratio held steady from a year ago, but that the value of bad housing loans as a share of its housing loan book had risen.
Still, investor relations head Jimmy Koh told The Straits Times: "Even with a possible rise in the interest rate environment, no material deterioration is expected."
OCBC said last month that NPLs rose 20 per cent from a year ago, but the ratio of such bad loans to its total mortgage book was down to 0.5 per cent from 0.6 per cent a year ago.
As for DBS Group Holdings, third-quarter housing NPL was about 0.2 per cent, down from 0.25 per cent a year ago.
yasminey@sph.com.sg
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