DBS Bank's chief executive Piyush Gupta said Thursday, January 10, that the property cooling measures imposed last July had "more bite" than expected.
Since the implementation of the measures, DBS property loans segment shrunk by 40 to 50 percent.
The Singapore government had increased the Additional Buyer’s Stamp Duty (ABSD) by 5 percent for individuals and 10 percent for entities. Loan-to-value limits were also tightened.
Indian origin Mr Gupta was giving an update on DBS' market outlook for the first half of 2019 at a luncheon, according to a report by Todayonline. He said the bank had expected the measures to result in a 20 to 25 percent reduction in property loans. However, the actual hit turned out to be around 40 to 50 percent.
DBS had projected that it will add S$4 billion to its mortgage loan book at the start of 2018. The figure was expected to drop to between S$2.5 billion and S$3 billion following the property curbs – but the amount of property loans came in at under S$2.5 billion instead.
Mr Gupta added that despite the slow property market, he expects Singapore to still see an economic growth of between 2.5 and 3 percent in 2019. This is within the government estimates of between 1.5 and 3.5 percent.
At the luncheon, the DBS chief also talked about macroeconomic headwinds widely expected to hit global markets this year, said the report. The trade tensions between the United States and China, interest rate hikes by the US Federal Reserve, China's economic slowdown as well as Brexit form a "backdrop of anxiety" – which Mr Gupta believed will cause financial markets to "yo-yo massively". The market volatility in the second half of 2018 is likely continue this year.