Singapore Property Update

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MAS: Home buyers should exercise caution when buying properties in view of rising interest rates and upcoming supply

Singaporeans should exercise due caution when buying property, said the Monetary Authority of Singapore (MAS).

In its annual Financial Stability Review released on Friday (Nov 23), MAS said “that household debt grew 3 per cent year on year in the third quarter of this year, mainly on the back of a 3.4 per cent increase in housing loans in the same period. It said the rise in household debt is in line with income growth.”

 

File photo: Private properties in Singapore

 

It urges “households thinking of buying property to exercise caution in the face of rising interest rates and upcoming supply” in view of the the growth in value of new housing loans by 30 percent on year, in tandem with a pick-up in residential property demand.

“Households considering property purchases should carefully consider the impact of interest rate increases and the upcoming supply of new units in the medium term,” it added.

Despite the slow down in the rate of price increases and transactions with the introduction of recent property cooling measures, rental yields are expected to remain weak amidst a potential increase in interest rate.

As such MAS advised prospective buyers to remain “prudent in their buying decisions and factor in likely increases in their debt servicing burdens.”

“Over-leveraged households could also see a rapid deterioration in their balance sheet indicators if there is a sharp correction in property prices,” it warned.

Updated: November 23, 2018 — 3:52 pm
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