No unwinding of property cooling measures: MAS

Ravi Menon, managing director of Monetary Authority of Singapore at the MAS Annual Report Media Conference, on July 25, 2016.
Ravi Menon, managing director of Monetary Authority of Singapore at the MAS Annual Report Media Conference, on July 25, 2016. PHOTO: ST FILE

It would send wrong signal at time when some regional regulators have made further curbs

Adjustments to property cooling measures earlier this year do not signal the start of an unwinding of those measures, Monetary Authority of Singapore (MAS) managing director Ravi Menon said yesterday.

In March, the Government cut the holding period for the Seller's Stamp Duty and lowered the rates as speculative property flipping had fallen markedly, he said at the MAS Annual Report's release.

The Government also tweaked home loan curbs by excluding mortgage equity withdrawal loans with loan-to-value ratios of 50 per cent or less from the total debt servicing ratio framework, which limits the amount home buyers can borrow.

That was to give home owners greater flexibility to monetise their properties for retirement needs.

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However, the remaining cooling measures - rolled out progressively since 2009 - are still necessary as underlying demand for private residential properties continues to be firm in an environment of persistently low interest rates, he said.

Also, investors continue to search for yield and safety in property markets around the world, he noted.

"Regional property markets have been buoyant and their respective authorities have, in the past six months, introduced further property cooling measures," he said. "Easing the measures now would send a wrong signal."

Developers here have also been active despite the cooling measures, putting in bullish bids for recent Government Land Sales tenders, including one in Margaret Drive and another in Stirling Road.

ANZ economist Ng Weiwen said the MAS stance did not surprise him, given that property prices have not declined much from their peak.

"If domestic interest rates were to rise significantly, those who bought their properties in the last few years, when prices were very high, will have difficulty financing their mortgages, especially if they had taken up floating rate packages."

The comments come as MAS caps a robust year. After contribution to the Consolidated Fund, MAS made a net profit of $24.3 billion in the financial year ended March 31.

This is a record profit, but Mr Menon noted that MAS' profit and loss outcomes are subject to sharp swings and do not reflect its underlying investment approach, which is conservative and emphasises steady, long-term returns.

MAS' underlying foreign investment gains have remained fairly stable at $10 billion to $12 billion on average over recent financial years.

The financial sector saw a net increase of 2,800 jobs last year despite the slowdown in financial sector growth to 0.7 per cent from 5.3 per cent in 2015, Mr Menon said.

Digitisation and automation are gathering pace, and many global financial institutions have been downsizing and restructuring, he noted.

But most retrenched finance professionals have been able to find alternative employment, within the industry or in other sectors.

MAS is working with financial institutions to identify jobs that may become threatened and to help workers at risk gain new skills.

"Jobs and skills have moved to front and centre of the MAS' financial sector development agenda," Mr Menon said.

"Working with our industry, we are resolved to help our workforce seize the opportunities that a thriving financial centre at the heart of a dynamic Asia presents."

A version of this article appeared in the print edition of The Straits Times on June 30, 2017, with the headline 'No unwinding of property cooling measures: MAS'. Print Edition | Subscribe