Chart of the Day: Net loan per housing unit declines

Last year, net loans clocked in at $363,155.

According to this chart from Maybank Kim Eng, the net change in housing loan per unit has hovered around $500,000/unit from 2010 to 2013.

Whilst it shot up to $762,184 in 2014, it has been declining ever since, down to $437,991 in 2015 and to $363,155 last year.

"Intuitively, the declining trend for loans per private residential unit over the past two years is consistent with lower property prices and a smaller residential unit size," Maybank Kim Eng said.

In the past quarter, property price index was down around 12% from its peak in 3Q13.

Here's more from the brokerage firm:

Why was 2014 so exceptional when net loan per transaction increased to SGD762k? This is peculiar, especially against the introduction of total debt servicing ratio framework in June 2013. We think the higher loan amount in FY14 could be a possible reflection of the following:

Firstly, FY13-14 saw a 47-75% YoY increase in private housing supply and thus experienced more loan drawdowns from completion of properties.

Secondly, prior to 2014, buyers comprised a large number of speculators and investors who tend to buy more expensive units. Following the last and most devastating cooling measures, they were forced to take up financing as they were unable to offload their inventory, thereby inflating the loan quantum.

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