Singapore may need to implement more measures to rein in its property market should low interest rates and an economic recovery renew speculative purchases, the central bank said.
Demand for private homes has experienced “strong growth” and unchecked price gains may expose the property market to risks in the global economy, the Monetary Authority of Singapore said in its “Financial Stability Review” on Monday. There should be “close monitoring” of home prices and transactions, it said.
Asian policy makers from South Korea to Singapore are confronted with rising real-estate values, which threaten to mimic the US mortgage bubble that roiled the global economy.
Singapore has barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments that are still being built.
“Despite the lingering uncertainties in the domestic and global economy, domestic property market activity has taken on its own dynamic,” the central bank said. “The risk of a renewed escalation of speculative momentum cannot be discounted. The nature and timing of further measures, if deemed necessary, would have to be balanced against the still uncertain path of economic recovery.”
The government is releasing more land for sale in the first half of next year as part of measures to prevent excessive price swings in the property market. Home prices rose 15.8 percent in the third quarter, the most in 28 years, after dropping 25 percent in the previous four quarters.
Low borrowing costs and the city state’s recovery from its worst recession in more than four decades aided the rebound in home prices, the central bank said.
Singapore’s economy is forecast by the government to contract as much as 2.5 percent this year. GDP may expand 3 percent next year, the Straits Times reported on Monday, citing Singaporean Minister Mentor Lee Kwan Yew (李光耀).
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