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Singapore: MAS says property market not overheated, but it will watch rising prices closely
THE Monetary Authority of Singapore (MAS) remains “highly vigilant” to the risk of a sustained increase in housing prices relative to income trends, with a prolonged divergence seen as unsustainable, said a top executive from MAS.
In his opening remarks at the launch of MAS’s annual report, managing director Ravi Menon noted that the property market has been “remarkably resilient” in the face of the pandemic. The residential property price index rose by 1.6 per cent in 2020, even as nominal gross domestic product (GDP) contracted 8.2 per cent.
As at the first quarter of 2021, the property price index was 5.6 per cent above its pre-pandemic levels, while nominal GDP was about 4 per cent below, he noted.
When asked by the media, Mr Menon said that the property market is not considered overheated at this juncture.
“We will never tell in advance whether we would implement (property cooling) measures because that defeats the purpose of implementing the measures,” he said.
“We hope the market will continue to remain stable and that we don’t have to make any moves.
“But we have said many times that we are just as determined to make sure that the market remains stable, and prevent overheating from happening.”
On whether there is a possibility of an asset bubble being formed on the back of flush global liquidity, Mr Menon said that this is a “big issue” for central banks and regulators around the world.
With central banks adopting very highly accommodative monetary policies such as low interest rates, a good part of this liquidity has gone into financial asset markets and real estate markets.
“This is a big problem,” he noted.
That being said, Singapore has a comprehensive set of macroprudential policy tools to keep the property market here from over-inflating, and this has resulted in relative stability in the market in the past five years, said Mr Menon.
He added that this is something that MAS will continue to watch closely.
Source: https://www.businesstimes.com.sg/government-economy/mas-says-property-market-not-overheated-but-it-will-watch-rising-prices-closely