On Thursday, June 29, the Monetary Authority of Singapore said that in the wake of low -interest rate and foreign investors looking forward to investing in real estate, property cooling measures are necessary. This is according to a news report published on Today Online.
Ravi Menon, managing director, MAS, stated that private home prices, during the last 14 quarters, dropped by about 12 percent after it increased just about 60 percent over the 17 quarters.
Amid the recent property launches doing good, Ravi Menon revealed that since the Total Debt Servicing Ratio (TDSR) was rolled out in 2013, the transactions have gone up in the Q1 2017 by almost 40 percent from the average quarterly transactions.
“When we implement easing measures now, it could send a wrong signal,” he says. “When there is an unsustainable surge in property prices, there will be risks, and this is not uncommon,” Menon added.
Actually, Singapore must protect herself against the spillover of investors because the property market has buoyed and in the recent months the governments of these investors have introduced cooling measures.
“Well thought modifications that were implemented in March by the government do not indicate the beginning of an unwinding of the property cooling measures as few experts have noted,” Menon explained.
Interestingly, the government has reduced the holding time frame for the Sellers’ Stamp Duty. Following the noteworthy decline in property flipping, the government has also reduced the rates. From the TDSR framework, the government also excluded loan-to-value ratios of 50 percent or less against mortgage equity withdrawal loans. This is to provide greater flexibility to the homeowners, for retirement needs, by monetising their properties.
When MAS took a stance on this measure, it was no surprise for the analysts.
“Since the rising interest-rates environment has put on a lot of pressure,” said CBRE research head for Singapore and South-east Asia, “what the market needs is a strong reaction in order to challenge all the efforts taken over the past few years. This is to keep the residential market within the reach of affordable level and ensure financial health.”
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