Singapore home sales fell to a four-year low last year, with the central bank saying the nation's property market was stabilising.
Home sales dropped 33 per cent to 15,301 units last year, according to government data released yesterday. New housing loans declined and household balance sheets were strong, the Monetary Authority of Singapore (MAS) said after a Forbes article this week warned the city state was headed for an "Iceland-style meltdown".
Singapore unveiled new rules last year governing how financial institutions grant property loans to individuals, in addition to previous curbs including new taxes and higher down payments.
Fourth-quarter home prices slid for the first time in almost two years, trimming annual gains to the smallest since 2008 as mortgage curbs cooled prices in Asia's second-most expensive housing market.
"The government and MAS have taken decisive steps to cool property demand and prevent excessive leverage," the central bank said. "Singapore's banks are resilient, with strong financial and capital positions."
Singapore's home sales last month plunged 82 per cent year on year to 259 units, the lowest since January 2009.
Record home prices amid low interest rates had raised concerns of a housing bubble and prompted the government to widen a campaign that started in 2009 to curb speculation in the property market.
"The measures have impacted sales last year especially after the loan curbs in June," said Lay Keng Lee, the head of Singapore research at DTZ. "We don't see a rollback of the measures yet as it is too early for that, so sales may decline to between 12,000 and 15,000 units this year."
Iceland's economy was pushed into recession when its three largest banks defaulted on US$85 billion within weeks of each other in October 2008.
The meltdown forced the government to seek a bailout from the International Monetary Fund and implement capital controls.
"The central bank here has been more wary of excessive lending since the 1998 financial crisis," said Song Seng Wun, an economist at CIMB.
"The risk of Singapore heading in the direction of Iceland is extremely unlikely and there are enough analysts from reputable investment banks and credit-rating agencies on the ground here to flag that if such a risk were to emerge."