Government not relaxing property cooling measures for now: MAS

SINGAPORE: Following the introduction of cooling measures last year, Singapore’s property market is now "more sober" with early signs of slower price increases and lower transaction volumes.

This was according to Mr Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), who added that the measures still need time to work their way through.

When asked if the Government would, in the near future, relax the cooling measures introduced last year to the property market, MAS managing director Ravi Menon said the measures were implemented only a year ago and it takes time to allow them to work their way. But price increase has dampened and the market is more sober, and there is a good balance holding up the market.

Last July, the Government unexpectedly announced that it was raising the Additional Buyer's Stamp Duty rates and tightening loan-to-value (LTV) limits on residential property purchases.

These were macroprudential measures aimed at cooling a property market "that was showing early signs of potential over-heating", said Mr Menon.

Citing the 9 per cent surge in private residential prices between the third quarter of 2017 and the second quarter of 2018, he said there was a real possibility that property price increases would once again run ahead of economic fundamentals, as they did in the lead-up to 2013.

“If a renewed property bubble were to form, it would risk a destabilising correction later that would hurt households, businesses, and the banks. This risk was especially pertinent, given the strong pipeline of private housing supply coming on stream over the next few years,” he added.

Mr Menon assured that the Government will continue to monitor the property market closely and stands ready to help ensure a healthy and sustainable market.

As such, authorities decided to "act early and decisively to restrain the property market" and since then, the measures have helped to moderate the property market cycle.

Since the end of the second quarter last year, private residential price increases have eased significantly and average transaction volumes have fallen by 30 per cent.

Bids for land tenders, in both the en bloc sale and Government Land Sale markets, have also become "sober", said the central bank chief.

But Mr Menon stressed that the Government’s aim is not to depress property prices. Authorities also do not have a target rate of increase for property prices, nor can it manage the cycle too tightly.

Nevertheless, the Government has a role to help ensure that price movements are broadly consistent with economic fundamentals.

"In an economy that is growing in nominal terms at 3 to 5 per cent, it is not sustainable to have property prices increasing at double digits," he said.

Mr Menon stressed that the Government will continue to monitor the property market closely and stands ready to help ensure a healthy and sustainable market.

On whether recent protests in Hong Kong have benefited Singapore in terms of fund inflows from the Chinese city, the MAS chief said there have been "no signs of significant shift in business or funds". But he pointed out that Hong Kong's prolonged uncertainty is no good for Singapore, as the two cities complement each other.

"We should focus on the income effect. Both Hong Kong and Singapore are very attractive financial centres with unique strengths and value proposition."

He also said that the global economy has weakened and this is already affecting Singapore. However, there is no need to be alarmed. "The Singapore economy is in for a rougher ride but is well placed."

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Government not relaxing property cooling measures for now: MAS

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