Singapore No Place for Speculators as Home Stability Goals Met
Singapore Says Property Price Curbs Achieved Stabilization Goals
(Bloomberg) -- Almost a year after intervening to stem soaring property prices, Singapore has done what it set out to do and stabilized the property cycle, Minister for National Development Lawrence Wong said.
“The property market last year, before the cooling measures were put in place, we saw prices rising very sharply,” Wong said in an interview with Bloomberg Television on Thursday. “There was a very real risk that prices would outpace fundamentals, and I think if that had happened then eventually it would lead to a destabilizing correction and I think everybody would be worse off.”
Singapore’s government introduced cooling measures to slow price increases in July 2018, including raising stamp duties for second homes and entities, and tightening loan-to-value limits for housing loans granted by financial institutions. Home prices fell for a second straight quarter in the three months ended March 31, with luxury home values, or the cost of residences located in prime areas, down 2.9%, the most since the quarter ended June 2009.
“It was, as we had stressed then, not to bring down prices but to stabilize and moderate the cycle, and I think we have achieved that effect,” Wong said.
Asked if he was concerned about property buyers shifting focus from Hong Kong’s ever-upward property market to cheaper Singapore, Wong said there will always be foreign investors looking to buy because they think it’s a good investment. However, he said Singapore will continue to monitor prices and has a suite of available tools at its disposal to ensure stability.
“We welcome investors to our property market, but what we want to ensure is that demand, regardless whether it’s local demand or foreign demand, doesn’t cause the prices to move at a pace that outstrips fundamentals."
Wong said “genuine homeowners” would understand. “A speculator may not be happy, because they would like to go in when the price is low and exit when the price is high and flip. But we don’t want to be a nation of property speculators. We want to be a nation of homeowners.”
Sufficient Liquidity
Singapore also has sufficient liquidity in its financial system to sustain housing demand, Wong said. That’s despite DBS Group Holdings Ltd., the city-state’s biggest bank, saying last month that the only “caveat” in an otherwise healthy performance was the net shrinkage in its mortgage book.
Wong said Thursday that “interest rates are still quite low, compared to the past.”
“The liquidity is still there,” he said. “Not to mention that over the years with growing economies and rising affluence, people have funds and they’re looking to invest. So they will look for attractive assets be it in the financial markets, or in the property markets.”
On inequality in Singapore:
- Wong says government is putting in place a more progressive system with regard to wealth taxes, centered largely on property
- Says Singapore wants to be a more inclusive society
- For lower-income earners, Wong says for every dollar of tax paid, they get S$4 of benefits; for high-income earners, for every dollar of tax, they get half a dollar of benefits
--With assistance from Joyce Koh and Stephanie Phang.
To contact the reporters on this story: Revathi Valluvar in Singapore at rvalluvar@bloomberg.net;Melissa Cheok in Singapore at mcheok2@bloomberg.net;Haslinda Amin in Singapore at hamin1@bloomberg.net
To contact the editors responsible for this story: Joyce Koh at jkoh38@bloomberg.net, Katrina Nicholas
©2019 Bloomberg L.P.