On July 12, Bank of America (BoA) downgraded City Developments and UOL Group, the two largest listed local developers with significant residential land bank and units for sale in Singapore. In addition to more expensive mortgages, BoA sees the risk of more property curbs in 2H2022. Year to date, residential property prices have been on a tear.
In its second inter-meeting move this year, the Monetary Authority of Singapore (MAS) further tightened the exchange rate policy by re-centring up the official SGD NEER policy band by an estimated 170bps. MAS also upgraded both its 2022 headline and core CPI forecasts to 5%–6% and 3%– 4% respectively, up from 4.5%–5.5% and 2.5%–3.5% previously. MAS core inflation is tipped to rise above 4% and is still expected to ease in 4Q2022, notes OCBC Investment Research.
Sora (Singapore overnight rate average), the local policy rate rose to a two-year high of more than 1.91% on July 13, ahead of the MAS announcement. As a result, mortgages are likely to cost more.
