Singapore: Too early to relax property cooling measures

Singapore said Friday that measures it had implemented to cool down the property market have succeeded but it was "too early" to relax them. The remarks by Finance Minister Tharman Shanmugaratnam in parliament came amid concerns by analysts about property prices soaring to unsustainable levels in emerging markets, including those in Asia. "Our cooling measures have been aimed at moderating the market so as to prevent property prices from getting too far out of line with incomes," Shanmugaratman said as he unveiled the 2014 national budget. "We are not engineering a hard landing, but neither are we able to eliminate cycles in the property market, with upswing in prices in some years followed by corrections," he said. "Given the run-up in prices in the last four years, it is too early to start relaxing our measures. The government will continue to monitor the property market and adjust the measures when necessary." Singapore last year imposed additional measures in a bid to dampen down the red-hot property market, including raising stamp duties, which made it costlier for foreigners to buy property. The government also sharply increased minimum cash downpayments for individuals applying for loans for second or subsequent homes. These were in addition to earlier measures to tame the property market, including a move by the central bank in 2012 to impose a maximum tenure of 35 years for new housing loans. Analysts have raised the red flag about soaring property prices in several Asian economies and have urged regional policymakers to take steps to prevent risky asset bubbles. Low interest rates have fuelled a property boom in emerging markets which may have led consumers to overborrow. There are fears that a rise in interest rates expected to accompany a winding down of the economic stimulus package in the United States would lead to borrowers unable to repay their loans. This could deflate property prices and destabilise the banking system. Song Seng Wun, regional economist at Malaysian bank CIMB, agreed with the government's move to maintain the property cooling measures. "Prices are just starting to stabilise. If the government is to relax (the measures) too soon before interest rates start to climb, you could potentially create a risky property bubble," he told AFP. Rajiv Biswas, Asia Pacific chief economist at IHS Global Insight, said Singapore made the decision to keep the measures because of "apprehension mounting among global investors about speculative property bubbles building in some international property markets, including certain Asian cities".