TODAY Online : 'Volume to be limited this year'

'Volume to be limited this year'

05:55 AM Mar 09, 2010

by Desmond Wong desmondwong@mediacorp.com.sg

SINGAPORE - Singapore's property market has been on a run but banks here are not likely to see a significant jump in home loans growth this year.

According to analysts, that is because they do not expect the number of transactions to increase greatly from last year, as the steam runs out of the mass market property segment, but they say support could come from interest in the mid-tier to high-end property sectors.

The number of home sales came in at between 33,000 and 34,000 last year, close to the peak seen in 2007 and that has helped Singapore banks pull through a challenging year.

However, market-watchers do not expect to see the same pace of growth in home sales this year and some say, this could put a dent in the plans of local banks to grow loans here as they try to expand.

DMG and Partners Securities' associate director and co-head of research Leng Seng Choon said: "From the over all perspective, if the loans market is only so big in Singapore, and a few major players want to expand their market share or have higher loan growth, we may see some of them falling behind in some of their guidance."

Recently, during their financial results briefing, DBS Bank and United Overseas Bank have suggested single digit growth in loans for the year, while OCBC Bank targets low double digits, with home loans making up about a quarter of their portfolios.

While the number of transactions may not increase as sharply as last year, their value may improve. This is because interest could be returning for the higher end of the property markets.

DTZ Debenham Tie Leung's head of South-east Asia research Chua Chor Hoon said: "In terms of value, they may be able to lend out more than they did last year and that is because prices have moved up a fair bit from last year, and we're seeing more interest in the mid-tier and higher end."

Analysts also said that growing economic stability could provide more help for banks. With job security and growth seemingly on the way, more buyers are expected to enter the market, expanding the pool of borrowers for local lenders.

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