SINGAPORE (Nikkei Markets) -- The slowdown in Singapore's housing market has been worse than expected after the government announced new cooling measures in July, according to the city-state's biggest bank.
Speaking at a lunch for private banking clients on Thursday, Chief Executive Piyush Gupta said DBS Group Holdings would book less than 2.5 billion Singapore dollars ($1.85 billion) in new mortgage loans for 2018, well below the S$4 billion projected at the start of last year.
However, notwithstanding the headwinds from the property market, Singapore's economy could grow by 2.5% to 3.5% this year in line with still healthy global growth, Gupta said.
Singapore developers have seen demand fall sharply since July when the government unexpectedly raised the stamp duty on purchases by foreigners as well as locals looking to buy a second home. Authorities also tightened loan-to-valuation limits to keep prices in check.
While private home prices continued to edge higher in the third quarter, they posted their first decline in six quarters during the last three months of 2018 as uncertainty in global financial markets worsened sentiment.
The latest measures clearly had "more bite than expected" as previous rounds had crimped demand for property by 20-25%, Gupta said.
DBS controls about 30% of Singapore housing loan market, and its mortgage book stood at around S$73.3 billion at the end of 2017, including lending in other countries, according to mortgagewise.sg.
Besides Singapore, the bank has operations in Hong Kong, China, Taiwan, India and Indonesia. DBS' private bank is Asia's sixth largest, behind UBS, Citi, Credit Suisse, HSBC and Julius Baer, according to Asian Private Banker, an industry publication.
Turning to China, Gupta downplayed concerns about the economy, noting the slowdown was partly due to Beijing's efforts to promote quality growth.
Even though the Chinese authorities are releasing reserve requirements and pumping in liquidity, they are trying to direct it to small and medium companies rather than to industries that face overcapacity, he said.
The denial of new financing to weaker companies can be seen in the almost 100 bond defaults in China last year, he added.
Still, "if you get 6-6.5% growth rate in China this year, it's not a recession," he said.
Gupta said he remained bullish about the U.S. economy although it would likely suffer a cyclical slowdown following the boost from tax cuts last year.
He expressed concern about Europe, which faces various political challenges such as the rise of right wing extremists and continued doubts about the U.K.'s ability to exit the European Union without disruption.