I refer to the report “MAS relaxes TDSR loan curbs for some homeowners” (Feb 11), and welcome the tweak to the loan policy.
The Total Debt Servicing Ratio was introduced last June to encourage financial prudence and discourage people from speculative investment in property.
It has hit home sales and launches in the suburbs and, at this point, any further cooling measures would hurt the genuine, mid- to long-term investors.
There is a limit to how much a developer will lower prices to attract buyers, other than to entice the latter to much smaller, more affordable units.
More investors are looking at neighbouring countries and Australia for more flexible loan criteria, but with similar stringent screening of borrowers’ ability to repay the loan.
From an economic standpoint, one may ask whether Singapore benefits if our people invest their monies overseas. Recent reports about investing in Iskandar Malaysia suggest that more young people want to earn money in Singapore, but spend a luxurious lifestyle where cost of living is lower.
The TDSR hits Singaporean buyers harder than it does foreigners, leading to more co-ownership of private property among family members, who need a bigger loan due to the cash outlay for the Additional Buyer’s Stamp Duty.
It has probably a lower impact on first-time homebuyers than on property investors, more of whom are also turning to commercial/industrial properties for more growth in rental income.
I look forward to a TDSR framework that does not constrain genuine, long-term local investors and diminish their capacity to play critical economic roles here in the coming years. After all, property is a safer investment here than, say, stocks.
from James Poh Ching Ping
Source : Today 17 Feb 2014