While the recent property cooling measures are working, it is still too early to relax those measures since property prices remain high, said the Monetary Authority of Singapore (MAS) and reported in the media.
“Risk factors have not changed,” MAS Managing Director Ravi Menon said at the MAS annual report 2013/2014 press conference yesterday.
He noted that property prices soared 60 percent in the past four years and dropped by just 3.3 percent during the last three quarters.
Much like China, Singapore is concerned that potential property bubble might destabilise the financial industry and eventually push up inflation. With this, China introduced various measures which include credit curbs as well as restrictions on buying more than one home.
Similarly, Singapore implemented a series of property-market curbs since 2009. The most recent was rolled out in June 2013, when authorities tightened property loan rules to discourage imprudent borrowing.
Aside from increasing processing times for home loans, the measures also slowed housing, said analysts.
“It is premature to ease property measures now,” said Menon. This is because global interest rates are still at historic lows while debt levels among highly-leveraged households are high, explained MAS.
It forecasts economic growth of between two percent and four percent this year, with a slight increase expected in Q2 2014. .
“However, there are downside risks to growth outlook,” said Menon, citing conflict in Ukraine and the Middle East.
MAS now expects inflation to grow at a pace of between 1.5 percent and 2.0 percent in 2014, compared to an earlier forecast of a 1.5 percent to 2.5 percent increase.
Menon attributed the decline in overall inflation to slowing home and car prices.