Property curbs to stay until market steadies: MAS

SINGAPORE — The property market may be stabilising, but prices have not softened enough for the Government to unwind the cooling measures introduced in recent years, the Monetary Authority of Singapore said yesterday.

“Property prices remain at an elevated level,” MAS managing director Ravi Menon said at the release of the central bank’s annual report yesterday. “It’s premature to ease the cooling measures now. It is important that we secure the gains we have made in stabilising the market and restoring financial prudence.”

Singapore has introduced several rounds of measures, including additional buyer’s stamp duty and tighter loan restrictions, to stabilise the property market. While the measures have worked to bring prices down about 3.3 per cent over the last three quarters, residential values are still elevated considering the 60 per cent rise seen over the last four years, Mr Menon said.

Additionally, several risk factors remain. “Global interest rates are still at historical lows and relaxing property measures in the current easy liquidity environment may set off another spiral of price increases … The level of debt among highly-leveraged households remains high even though debt growth has stabilised,” Mr Menon said.

Year-on-year growth of household debt slowed to 5.5 per cent in the first quarter this year from nearly 13 per cent in the third quarter of 2011, MAS data showed.

Mr Menon’s statement came after Deputy Prime Minister Tharman Shanmugaratnam said earlier this month that the property down-cycle is not yet over and that further price correction could be expected.

“So there’s nothing surprising about what the MAS said yesterday,” Mr Nicholas Mak, executive director for research and consultancy at SLP International Property Consultants, told TODAY. “But I believe there’s some degree of over-regulation. As the market starts to soften, I hope the Government will periodically review these cooling measures, especially the total debt servicing ratio, which has hurt retirees’ ability to access housing loans.”

Mr Menon said yesterday the Government has not set a timeline or target for any policy changes. He added: “Our objective is not to see a collapse in prices, but to have an orderly correction in the market, which is now just beginning to take place.”

And as part of its agenda to ensure financial prudence, MAS welcomed the possibility that the United States Federal Reserve may raise interest rates sooner than expected. “From our perspective, the sooner there’s normalisation in the (US) monetary policy the better … We can then have better macro-prudential conditions,” he said. “We shouldn’t wish for it to be delayed.”