According to the latest Fitch Ratings, private land prices in Singapore is forecast to rise by a modest 2 percent during the following two years, a significant drop compared to 8% increase in 2018, reported that the Business Times.
“We expect home price growth to signify the regaining real GDP growth rates of 1.5percent in both 2020 and 2021, after expansion decelerated to 0.6percent in H1 2019,” Fitch said in its Global Housing and Mortgage Outlook 2020 report.
By Q3 2018 into Q1 2019, mortgage rate increase and regulatory sanding saw private dwelling prices dropped 0.7%. But, land prices have rebounded since Q2 2019 and Fitch is anticipating”minor expansion” to the remainder of the year.
The report also noted that private land prices will continue to climb if debtor affordability is enhanced, home incomes grow faster than house prices and when interest rates are low, adding:”but when the government viewpoints housing prices as increasing more than is warranted by economic fundamentals, we anticipate that the authorities would again trendy the market through macro-prudential measures”
Fitch expects the home NPL (non-performing loan) ratio to marginally increase in the subsequent two years, albeit remaining low at 0.4% to 0.5%, on the back of enhancing family occupancy ratio.
Moreover, Fitch doesn’t anticipate a mortgage rate increase in the near future, encouraging borrowers’ ability to pay. Mortgage rates rapidly increased to 2% at the end of the first half of 2019 because of a sharp increase in the benchmark rates such as the Singapore Interbank Offered Rate (Sibor).
On the other hand, the city-state’s benchmark rate began to decrease after the US Federal Reserve introduced a collection of three rate reductions from July this year.
For this particular, mortgage financing growth is forecasted to remain subdued in the near term.
“After a projected small decrease of 0.5percent in 2019, we anticipate 2% annual increase in each of 2020 and 2021 consistent with enhancing market sentiment,” said Fitch.