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Keeping The Equilibrium

Keeping The Equilibrium.

Despite the soft outlook for the private housing market, analysts said that cooling measures and loan curbs still have a role to play in keeping the market at an equilibrium state. This is especially so when buying demand has improved despite risks in the economy.

The Monetary Authority of Singapore (MAS) last year refined the TDSR framework to allow all homeowners to be exempted from meeting the 60 per cent threshold when refinancing mortgages of the home they reside in, regardless of when the property was purchased. Previously, only owner-occupied homes bought before the introduction of TDSR were exempted from meeting the threshold.

Nonetheless, the tweaks to the TDSR are merely a fine-tuning by the MAS. The Government, in several announcements last year, has reiterated that it is premature to relax the cooling measures and we can expect that as the status quo in 2017, especially with improving demand despite economic risks.

Although the macroeconomic data doesn’t seem to support the fundamentals of the housing market, there is a risk of capital inflows due to more severe property curbs in Hong Kong and China.

Should more foreign demand be diverted to Singapore, the Government might even step up efforts to cool the market. However, at this juncture, such punitive measures are not likely to be implemented.

Adapted from: TODAY, 5 January 2017