The Monetary Authority of Singapore on Thursday (29 June) said the property cooling measures remain necessary given that the underlying demand for private residential properties continue to be firm amid a persistently low interest rate environment and foreign investors looking for good yields, reported Today Online.
MAS managing director Ravi Menon revealed that private home prices dropped by almost 12 percent during the last 14 quarters after increasing by nearly 60 percent over 17 quarters.
But with recent property launches registering good take-ups, he noted that transactions jumped by almost 40 percent in Q1 2017 from the average quarterly transactions since the Total Debt Servicing Ratio (TDSR) was rolled out in 2013.
As such, he believes that “easing the measures now would send a wrong signal”.
“The risk of a renewed unsustainable surge in property prices is not trivial,” said Menon.
In fact, the city-state must guard against a spillover of investor demand as the property markets within the region have been buoyant and their respective governments introduced cooling measures in recent months.
He explained that calibrated adjustments made by the government in March “do not signal the start of an unwinding of the property cooling measures as some commentators have suggested”.
Notably, the government shortened the holding period for the Sellers’ Stamp Duty and reduced the rates following the significant decline in speculative flipping of properties. It also excluded mortgage equity withdrawal loans with loan-to-value ratios of 50 percent or less from the TDSR framework to provide homeowners greater flexibility in monetising their properties for retirement needs.
MAS’ stance on the measures came as no surprise to analysts.
“With pressures coming from a rising interest-rates environment, the last thing the market needs is a knee jerk reaction to undermine all the efforts over the past few years to keep the residential market at an affordable level as well as in relatively financial health,” said CBRE research head for Singapore and South-east Asia.
This article was edited by Denise Djong.
