Singapore Home Prices Moderated After Curbs, Central Bank Says

(Bloomberg) -- Singapore’s recent property market cooling measures have moderated the pace of home-price rises and subdued transaction activity, the nation’s central bank said. That should contribute to stronger household balance sheets over the medium term.

Aggressive land bids have declined after the July curbs, which should benefit the long-term stability of the property sector and encourage prudence among real estate firms, the Monetary Authority of Singapore said in its annual financial stability review Friday.

Other key highlights in the report:

  • While growth in household debt remains in line with income growth over the past year, housing loans have increased, in tandem with the pickup in property demand.
  • With rental yields expected to remain weak, households should exercise prudence when considering taking up bank advances to fund property purchases.
  • Households should continue to be aware of their ability to service debt, given headwinds of rising interest rates.
  • Sharp property price increases, if left unchecked, could have run ahead of economic fundamentals and raised the risk of a destabilizing correction later, especially with rising interest rates and the strong pipeline of housing supply.
  • Lenders should actively monitor their foreign currency liquidity risks, the MAS said, citing potential FX liquidity risks from an abrupt tightening of global financial conditions.
  • The domestic banking sector has seen “healthy” loan growth, declines in nonperforming loan ratios, and overall strong capital and liquidity positions.
  • Rapid digitization and adoption of fintech has led to rising concerns about the potential systemic implications of cyber incidents on the financial system.
  • While early studies show no material risks from digital tokens to financial stability, the MAS continues to monitor and study digital tokens and their underlying blockchain technology closely.

©2018 Bloomberg L.P.