Singapore home prices are on the city-state’s longest slide in almost two decades, but the authorities running the country’s economy have no intention of letting up on the restrictions that started taking the air out of a historic pricing bubble almost four years ago.
The Monetary Authority of Singapore (MAS) introduced new regulation relaxing mortgage financing rules, but the Singaporean central bank made it clear that property curbs such as a stamp duty on transactions involving foreign buyers are here to stay, according to an account by Bloomberg.
Tweaking the Rules Without Opening the Market
“This doesn’t represent an easing at all,” MAS Managing Director Ravi Menon stated. “If you look for a prop up to the market, this is not going to help as it doesn’t apply to new loans. This is to improve financial prudence without creating new demand for housing loans. We won’t ease anytime soon.”
The changes that Menon was referring to included easing of restrictions on households wanting to refinance their existing mortgages by exempting them from the 60 percent cap on their total debt-servicing ratio, a requirement under the Total Debt Servicing Ratio (TDSR) framework the country has had in place since 2013, but the exemption only applies for properties inhabited by their owners.
The TDSR rule came under scrutiny when many homeowners found it difficult to refinance their mortgages under the strict requirement, a policy that came about in response to Singapore’s ever-rising prices.
Singapore Restrictions in Line with Hong Kong and Vancouver
Singapore imposed the debt servicing restriction in 2013 following a surge in purchases of housing by non-residents, particularly by buyers from mainland China. The city”s market curbs also included limiting the length of mortgages, tightening loan-to-value ratios and an increased stamp duty of 15 percent on purchases by non-residents.
Since the restrictions were put in place, prices have fallen for 11 consecutive quarters and are currently 9.4 percent below their peak in 2013. The government has repeatedly made clear that these housing curbs will remain in place despite slowing economic growth and rising unemployment.
Similar measures were introduced in Hong Kong in 2013, including a 15 percent tax on foreigners as well as mortgage restrictions and taxes on quick resales. Across the Pacific, Vancouver is the latest city to introduce a new stamp duty on foreign purchases of homes up to 20 percent, and recent data suggest the tax has had an immediate impact on the market.