Too early to lift property curbs, says MAS chief

SINGAPORE — The moribund housing market may have set off a chorus of voices calling for the property cooling measures to be relaxed, but Monetary Authority of Singapore managing director Ravi Menon said it is premature to do so as the price correction has been modest, putting paid to hopes among developers and homeowners of a market rebound.

“Property prices have softened somewhat, but like I said last year, in the context of the price increase that had occurred — 60 per cent over three years — the softening we have seen is really not all that much. So, it’s still premature to consider removing any of the cooling measures that are in place,” Mr Menon said yesterday at the media briefing to release the central bank’s annual report.

Housing prices began their sharp climb in the middle of the 2009 as confidence returned to the market after the global financial crisis, before reaching their peak in the third quarter of 2013. The market has since fallen steadily but gradually after the MAS introduced in June that year the Total Debt Servicing Ratio framework for property loans to strengthen credit practices by financial institutions and encourage prudence among borrowers.

According to flash estimates released by the Urban Redevelopment Authority (URA) earlier this month, prices of private residential properties fell by 0.9 per cent in the second quarter, marking the seventh continuous quarter of price declines since the record high in 2013. However, prices have corrected less than 7 per cent from their peak, and hence, the cooling measures introduced in 2009 such as the additional buyer’s stamp duty (ABSD) and the seller’s stamp duty are unlikely to be rolled back.

Mr Leong Wai Ho, economist at Barclays said: “It is fair from the point of view of a policy stance aimed at re-engineering home affordability. The property market cooling is happening in an orderly fashion, and it is prudent to allow this to continue.”

Mr Ku Swee Yong, chief executive of property firm Century 21, said Mr Menon’s latest remarks came as no surprise. “Based on the still-strong reaction from developers to Government Land Sale tenders and the decent response to some of the new launches, this is probably not the correct time to be easing curbs,” he said.

Mr Menon’s remarks mirror those of Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, who said in October last year that “prices have some distance to go in achieving a meaningful correction”. Earlier that same month, National Development Minister Khaw Boon Wan had also said it was not the right time to wind down cooling measures and there is still room for prices to moderate.

The Real Estate Developers’ Association of Singapore has repeatedly called on the Government to ease some of the cooling measures, especially the ABSD. It said earlier this year that the ABSD on the high-end housing market “runs counter to the Government’s efforts to encourage foreign investment flows into the country”.