ASEAN KEY DESTINATIONS
Singapore fights property bubble
High domestic liquidity, cash-rich foreign investors and low interest rates have stoked demand, with prices for some sectors in Hong Kong and Singapore surpassing peaks seen in previous property booms.
China is also trying to rein in buyer exuberance by tightening credit and imposing other regulations that make it tougher to buy and sell property.
The International Monetary Fund said in a report in June that booming Asian real estate markets “may pose risks to financial stability as banks are increasingly vulnerable to a price correction.”
“In addition, because the majority of mortgage loans in Asian economies carry floating rates, the widely anticipated rate hikes in the region may increase the burden on household balance sheets,” it added.
Singapore on Monday introduced new regulations to curb “flipping”— buying condominium units on easy credit and reselling them for a quick profit even before the property is built or opened for occupancy.
A typical three-bedroom suburban apartment of around 100 square meters that will be ready for occupancy in only two or three years now costs at least a US$1 million in Singapore.
In Hong Kong, a similar property can cost twice as much.
“We think that if we do nothing, there’s going to be a bubble,” Singapore’s Minister for National Development Mah Bow Tan said.
“And when the bubble bursts, not if but when it bursts, there will be severe implications for individuals as well as for the economy as a whole,” he said.
Singapore’s latest measures are aimed largely at buyers who have at least one outstanding mortgage.
The minimum cash down payment was raised from five to 10 percent of valuation, while the maximum amount a bank can lend was capped at 70 percent, down from 80 percent. The balance can be taken from a buyer’s pension fund.
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