PROPERTY prices in Singapore have not seen a “meaningful correction” yet, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Tuesday.
“We have seen some correction in both private property prices and HDB resale prices over the last 4-5 quarters, but there is some distance to go in achieving a meaningful correction after the sharp run-up in prices in recent years,” said Mr Tharman, who is also chairman of the Monetary Authority of Singapore (MAS), at the Credit Counselling Singapore’s 10th anniversary luncheon.
“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.”
He noted how the risk profiles of borrowers have improved, with the share of borrowers taking up multiple housing loans declining to 13 per cent of new housing loans as at the second quarter of this year, from 30 per cent in 2011.
The average tenure of new private housing loans has also been trimmed to about 25 years, compared to a peak of 30 years in 2012.
Last Friday, figures from the Urban Redevelopment Authority (URA) showed prices of private property falling by 0.7 per cent in the third quarter of this year, compared to three months earlier. That marked the fourth consecutive quarterly drop, though it was also the most benign dip since prices chilled a year ago.
The HDB resale market was hit much harder in the latest quarter, with prices slipping 1.7 per cent from a quarter ago – the biggest decline since the Q3 2001.
Among the cooling measures undertaken by the government was the total debt servicing ratio (TDSR) framework put in place last year. Under TDSR, a borrower’s monthly instalments for all debt servicing – including mortgage payments – must not cross 60 per cent of his gross monthly income.
*Spotlight thrown on highly leveraged borrowers