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Tharman signals cooling measures not likely to be relaxed soon

Signalling that the Government is not intending to relax property cooling measures any time soon, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said yesterday there is “some distance to go in achieving a meaningful correction”.

Singapore housing. TODAY file photo

Singapore housing. TODAY file photo

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Signalling that the Government is not intending to relax property cooling measures any time soon, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said yesterday there is “some distance to go in achieving a meaningful correction”.

“If we do not get a meaningful reversal after each upswing, property prices will run ahead of the growth of household incomes over the long term, which we should avoid,” said Mr Tharman, who was speaking at Credit Counselling Singapore’s 10th anniversary lunch.

He noted that there has been some correction in both private property prices and Housing and Development Board resale prices over the last four to five quarters, following the sharp run-up in recent years.

“We can never get rid of cycles in the property market, with the upswings in some years being followed by corrections. Our cooling measures cannot eliminate the cycle, but they aim to temper it,” he said. “What this means is avoiding a bubble during the upswing and allowing for a correction in prices subsequently.”

The Government had introduced several rounds of cooling measures, including the Total Debt Servicing Ratio framework and tightened loan-to-value ratios for housing loans.

Mr Tharman said the share of borrowers taking multiple housing loans has fallen from about 30 per cent of new housing loans in 2011 to about 13 per cent as of the second quarter this year. The average tenure of new private housing loans has also shortened to about 25 years, compared with a peak of 30 years in 2012.

Last week, National Development Minister Khaw Boon Wan said it is still not the right time to wind down cooling measures and that there is still room for prices to moderate. SIAU MING EN

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