Major property stocks took a hit yesterday after new rules to cut the maximum number of units allowed in new private flat and condominium developments outside the central area were unveiled.

The rules will cut the number of units allowed in a project and increase the average size of new private flats to at least 85 sq m, up from 70 sq m, beginning on Jan 17.

UOL shed 1.58 per cent to $6.22, while City Developments slid 1.55 per cent to $8.24.

GuocoLand was down 0.5 per cent to $1.84, while Bukit Sembawang fell 0.54 per cent to $5.49. Ho Bee Land retreated 1.58 per cent to $2.49.

However, property giant CapitaLand closed flat at $3.11 after falling to $3.06 earlier in the day.

DBS analysts Derek Tan and Rachel Tan said in a research note that developer stocks are likely to remain under pressure, and could even "test new trough levels".

This could mean a near-term downside of up to 10 per cent for developer stocks.

"Home buyers are likely to hold back purchases to 2019 if they can, as most are likely to adopt a wait-and-see attitude in order to ascertain the impact on developers' bids for upcoming land sites," they said.

However, RHB analyst Vijay Natarajan said that share prices should stabilise around the current levels, adding that while the news is slightly negative, it "shouldn't cause more downside to the share price".

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