Wednesday, Jun 3, 2015Wednesday, Jun 3, 2015

Keeping cool over property measures

Published on Jul 7, 2014 7:33 AM

It should have come as no surprise that on the first anniversary of the most significant measures aimed at underpinning principles of prudent borrowing and lending, a fresh call should come from the property industry for a review of measures that have left the market here listless and lacklustre.

The Total Debt Servicing Ratio framework, which took effect on June 29 last year, was not articulated nor specifically designed as a property cooling measure but was billed as a means of ensuring that borrowers do not overstretch themselves and accumulate too much debt.

It has nevertheless been in the property market where the measure's reach and impact have been felt most significantly. Its stipulation that banks must factor in a borrower's total debt obligations before a new property loan can be granted - coupled with other new measures such as additional stamp duties - had multiple hits: on market sentiment, transaction volumes and prices.

It is perhaps fair, one year on, to ask for a reassessment of the usefulness and validity of the cooling measures. Industry veteran Kwek Leng Beng's argument is that Singapore could lose its edge as an investment destination as foreigners opt instead for property markets elsewhere. Property players assert that speculators have been weeded out, prices have dipped and a cooler, more stable market has been established. There is also the fear of a systemic downward spiral.

Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!