Excess liquidity and low borrowing costs across the world may push Singapore’s property prices higher again, holding back the government’s efforts to cool the red-hot property market, said the central bank.
According to a report released by the Monetary Authority of Singapore, possible risks may emerge that would lead financial institutions to ease lending standards and give more loans to fill up the narrowing interest margins. Home buyers may also accept “excessive leverage” amid expectations of sustained low rates.
The government implemented new property measures in August, including raising the down payment for second home loans and imposing a stamp duty on properties held for less than three years.
After leading 36 global markets in property-value changes for Q2, statistics showed that property price gains in Singapore slowed in the third quarter.
“There is a possibility that transaction activity and prices could pick up again given the current global conditions of flush liquidity and low interest rates,” said the MAS. “The government will continue to be vigilant in monitoring developments in the property market, and if necessary, adopt additional measures to promote a sustainable property market.”
Prices of private homes surged 2.9 percent in Q3 from Q2, when they jumped 5.3 percent, according to the URA.