SINGAPORE: The "euphoria" in the Singapore property market calls for caution, the managing director of the Monetary Authority of Singapore said on Wednesday (Jul 4).
While the resurgence in property prices and rise in the number of transactions over the past year is welcomed, it should not decouple from economic fundamentals, said Mr Ravi Menon on the back of the release of the central bank's annual report.
AdvertisementFor one, the central bank remains mindful of the demand and supply dynamics in the local market.
“We have to ask ourselves if demand can match the supply that is coming onstream in the next few years – that is our concern,” Mr Menon said.
“As I said, the recovery is welcomed - why would anyone want the property market to continue sliding?”
However, this needs to be kept in line with economic fundamentals and not ahead of income growth, added Mr Menon.
AdvertisementAdvertisementThe central bank is also “sounding caution” to developers, individual buyers and banks to “be sober, balanced and exercise good judgement” amid the “euphoria” in the market.
Developers, for instance, should be cautious when making their land bids, bearing in mind the supply coming through.
The central bank is also reminding individual property investors to be cautious of debt servicing burdens and avoid taking on too much leverage when buying a house.
Banks also have to be careful when underwriting and should perform stress tests for future scenarios, said Mr Menon.
Mr Menon said the MAS, alongside the Ministry of National Development and the Ministry of Finance, are closely monitoring developments in the residential property market and remain committed to ensuring a sustainable market.
Let's block ads! (Why?)
More...