Private home prices still high, despite falls: MAS

Private residential property prices are still high, despite having declined for four straight quarters, the Monetary Authority of Singapore (MAS) said yesterday, adding that it would take more steps, if needed, to maintain a stable and sustainable housing market.

It said repeated rounds of property market cooling measures introduced since late 2009 have successfully brought down home prices by a cumulative 3.9 per cent since the final quarter of last year. However, it added that the prices had surged 62 per cent between the second quarter of 2009 and the third quarter of last year.

“Private property prices in Singapore have moderated but remain at an elevated level. New housing loans have declined in tandem with the fall in transactions. The property measures have also contributed to restoring financial prudence, but the prospect of higher interest rates remains a risk for some highly leveraged households,” the MAS said in its annual Financial Stability Review yesterday.

“The MAS will continue to monitor lending and borrowing activities, and take further measures where necessary to keep household debt at a manageable level,” the central bank added.

The comments come only a day after Mr Chia Boon Kuah, the president of the Real Estate Developers’ Association of Singapore, urged the Government to stand ready to take supportive measures to prevent the housing market from tipping over after the decline over the past year. Mr Chia said the looming supply of completed homes and the potential rise in vacancy rates would add pressure on an already declining market.

Overall transaction activity has fallen, with average monthly sales slowing to about 1,200 units in the first 10 months of this year, compared with 1,900 units last year and a peak of 3,200 units in 2012, the MAS said.

Mr Colin Tan, director of research and consultancy at Suntec Real Estate, said: “Sales are slow, but we still see projects with good value selling well, which means there is still liquidity and many people are also spending on overseas properties. So debt is still being built up and there is the risk that when interest rates rise, people may face difficulty servicing their loans,” he said.

“Prices are still elevated, one reason being property prices have outgrown income levels. And anything can happen when there is so much uncertainty surrounding when interest rates will rise, so we should watch the situation closely,” he added.

The MAS said overseas property purchases could pose additional risks to households, especially when investors are not familiar with the conditions in the markets that they buy in.

The central bank said overseas properties transacted by real estate agencies here rose from S$1.9 billion in 2012 to S$3 billion last year, before moderating to S$1.1 billion in the first half of this year. Properties in the United Kingdom, Malaysia and Australia accounted for 91 per cent of total transactions by value between January and June this year.

http://www.todayonline.com/business/private-home-prices-still-high-despite-falls-mas

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