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Govt remains ‘highly vigilant’ about continued rise in property prices: MAS chief

SINGAPORE — As property prices continue to increase, the authorities are being “highly vigilant” and will step in before the market overheats, Mr Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS), said on Wednesday (June 30).

The Monetary Authority of Singapore is closely watching property prices in Singapore and will intervene before the market overheats.

The Monetary Authority of Singapore is closely watching property prices in Singapore and will intervene before the market overheats.

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  • Singapore's nominal GDP contracted 8.2 per cent in 2020, while the residential property price index rose by 1.6 per cent 
  • Central bank chief Ravi Menon hopes the market will continue to remain stable and there will be no need to intervene
  • He added that people are advised not to invest in cryptocurrencies for the risks are huge and a lot of money can be lost


SINGAPORE — As property prices continue to increase, the authorities are being “highly vigilant” and will step in before the market overheats, Mr Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS), said on Wednesday (June 30).

Speaking during a media briefing on the release of MAS’ annual report, Mr Menon noted that property prices have risen above pre-pandemic levels even though economic growth has not fully recovered from Covid-19. He added that a prolonged divergence between housing prices and incomes is unsustainable. 

This was among the economic and financial concerns that Mr Menon said the authorities are keeping a close watch on in the year ahead.

Still, Mr Menon noted that Singapore’s economy should see a recovery in the second half of this year, due to strengthening global demand and progress in the national vaccination programme. 

Trade-related activities such as manufacturing and wholesale trade will be supported by resilient global trade and an upswing in the global technology cycle, and the demand for tech products such as semiconductors is expected to grow during this time. 

He added that Singapore is better equipped to handle the pandemic this year with more effective testing and tracing, swift isolation of infected cases, and vaccination. 

“I think once we have reached a threshold of vaccination in the 70 per cent or 80 per cent range, there’s a lot more scope to reopen the economy,” he said.

MAS’ annual report showed that investment returns from the official foreign reserves was S$8.2 billion in the last financial year that ended on March 31. 

During that period, MAS made a net profit of S$5.2 billion and will return half the profits — or S$2.6 billion — to the Government while the remainder will be added to MAS’ reserves. 

During the previous financial year in 2019-2020, MAS recorded a net profit of S$10.6 billion, and investment returns from the official foreign reserves was S$16.3 billion. 


Mr Menon said that while nominal gross domestic product (GDP) contracted 8.2 per cent in 2020, the residential property price index rose by 1.6 per cent in the same period. 

And as of the first quarter this year, the private property price index was 5.6 per cent above its pre-pandemic levels, while nominal GDP is 4 per cent below its pre-pandemic levels. 

“MAS, together with MND (Ministry of National Development) and URA (Urban Redevelopment Authority) remain highly vigilant to the risk of a sustained increase in prices relative to income trends,” he said. 

Asked if the property market has reached an “overheating stage” and if MAS will introduce any cooling measures to stem further price increases in the property market, Mr Menon said that he does not think the market is overheated. 

“If it's overheated, we've not done our job well. The approach of the Government is to prevent the market from overheating.” 

He added that MAS will “never tell in advance” if it will implement cooling measures, as it would defeat the purpose of doing so.

“So stay tuned and just watch, and we hope the market will continue to remain stable and that we don't have to make any moves. 

“Our goal is to make sure that the property market does not get ahead of underlying economic fundamentals… we'll continue to watch how the market moves from here onwards, before we make any judgements.” 


Mr Menon was asked about the central bank’s stance on cryptocurrencies, given that many countries have imposed regulation on their use. 

Mr Menon said MAS has three concerns: 

  • That individuals are investing in crypto assets without fully understanding them. Mr Menon said that the authority has made numerous efforts to educate the public on these risks and his advice is to stay away from investing in these currencies. “The risks are huge, price movements are very volatile... And if you put a substantial part of your savings or investment into these things, you could lose a lot of money.” 

  • That crypto assets can become a source of vulnerability if exposed to the financial sector. Mr Menon said that rather than try to control the crypto asset players directly, MAS’ approach is to make sure that the risks of the formal financial sector are well-contained and their exposures are monitored. “Many of (the crypto asset players) are trying to use this for cryptocurrency use cases that have great social and economic benefit, and we don't want to curtail that innovation.”  

  • That cryptocurrencies are used for illicit purposes such as for transactions on the dark web. Mr Menon said that this is a risk MAS is watching closely, but the central bank has so far not picked up any strong evidence that this is a problem here. 


Mr Menon said that MAS is conducting more stress tests to assess whether it is necessary to extend the current dividend restrictions on banks. 

Last year, MAS had called on Singapore banks to cap the amount of dividends paid to shareholders, so as to boost their capacity to offer loans during the economic fallout from the Covid-19 crisis. 

He noted that banks have managed to remain stable in their support of individuals and businesses throughout the pandemic:

  • MAS’ concerns that the crisis could strain the profitability of banks and weaken their capital positions have not materialised 

  • The Singapore banks’ common equity tier ratio — which compares a bank's capital against its assets — has held firm at 14.7 per cent in the first quarter this year, compared with 14.4 per cent before the pandemic. 

Mr Menon said that MAS will still conduct more stress tests of banks for the time being because problem loans can take time to surface.

“Borrowers on full or partial loan moratoriums may not show signs of financial stress, especially if they're also obtaining financial support from the Government,” he said. 

“As the support measures taper off, banks will have greater clarity about the repayment ability of their borrowers.” 


The incidence of cyber-security threats have continued to mount, Mr Menon said, in terms of both scale and complexity. Recent cyber attacks have affected major organisations such as technology giant Micrsoft and Colonial Pipeline, the company the running largest fuel pipeline in the United States. 

MAS’ website states that digital transformation has led to an expansion of service options to consumers but also exposed financial institutions here to cyber risks that can lead to operational disruptions and data breaches.

He added that though MAS has not seen a major disruption, it “does not mean that it may not happen”. 

Mr Menon said there are two key cyber attacks MAS is most concerned about: 

  • Ransomware attacks, where a victim’s data is not only being corrupted, but can also be accessed and extracted by the hacker. “MAS has asked financial institutions to review the adequacy of internal IT controls, as well as incident response, and business continuity plans to fend against the latest ransomware threats.” 

  • The second threat comes from hackers targeting major third-party IT vendors to “amplify the coverage of their attacks”. The criminals will be able to attack supply chains and infiltrate the networks and systems of multiple entities, Mr Menon said. “MAS has exhorted financial institutions to exercise strong oversight of their arrangements with third-party service providers to ensure system resilience and to maintain data confidentiality."

MS Ho Hern Shin, deputy managing director of financial supervisionat MAS, noted that 80 per cent of cyber attacks can be prevented if baseline cyber-security requirements are put in place. 

“We have put in place a legally binding requirement for all financial institutions — banks, insurers, capital markets entities, payment services entities as well, to (set up) basic cyber-hygiene requirements.” 

Related topics

MAS Ravi Menon property cryptocurrencies bank economy cyber security

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