Private property prices would have been 30% higher without cooling measures: Study

SINGAPORE — Had the various property curbs since the recovery from the global financial crisis not been implemented, private housing transactions, prices and mortgage loans could have been higher by as much as a third from what they are now, an analysis by the Monetary Authority of Singapore has found.

The central bank also found that tax measures, such as the Seller’s Stamp Duty (SSD) and the Additional Buyer’s Stamp Duty (ABSD), had a larger impact on transactions and prices compared to lending and land supply measures. Examples of lending measures include loan-to-value (LTV) limits and the Total Debt Servicing Ratio (TDSR) framework.

“The SSD reduced sub-sales significantly, whereas the ABSD raised the hurdle rate of return for property investors. The share of private residential property purchases by foreigners, which peaked at close to 20 per cent of total transactions in the fourth quarter of 2011, fell sharply after the implementation of the ABSD,” MAS said in its annual Financial Stability Review.

The reduction in transactions, in turn, cooled property prices and mortgage lending, it added.

Despite its smaller impact, adjusting land supply through the Government Land Sales programme was also found to be effective in influencing prices, the MAS said, pointing in particular to the signalling effects of the announcements. Meanwhile, lending measures tempered the growth of mortgage loans and affected transaction and prices through the credit channel while improving the risk profile of borrowers.

MAS said taking a multipronged approach can help target specific risks in the private housing market.

“These results are the outcome of a preliminary study of the effectiveness of the property-related measures introduced over the recent years. MAS will continue to carry out impact studies, including with more disaggregated and longer time series data,” it said.

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