HSBC said it is too early to tell if the measures implemented by the government to curb the property market are sufficient.
Capital inflows and low interest rates have left financial conditions loose, driving up property prices in the country. The property market has also been the beneficiary of other property-related investments, after Hong Kong implemented cooling measures in 2010, which may have diverted flows into Singapore.
Singapore property prices continued to climb despite the measures implemented in August 2010, which only limit the rate of property price appreciation.
The new series of measures announced last week show the government’s concern about the potential property bubble, as well as its willingness to implement decisive actions. The measures focus more on cooling demand, particularly of a more speculative nature, and on protecting banks and borrowers through tightened macro-prudential measures.
They will also help reduce a potential bubble and the macro-prudential measures will help lessen any implications from rate increases and any potential price drops by providing a larger equity cushion.
The government is clearly concerned about a potential property bubble and measures implemented demonstrate their willingness to take the necessary steps to avoid it. The property measures will surely help to cool the market. However, it is too early to tell whether they are enough.