MAS chief: Not yet time to ease cooling measures

Adjustments to property cooling measures earlier this year do not signal the start of an unwinding of those measures, Monetary Authority of Singapore (MAS) managing director Ravi Menon said yesterday.

In March, the Government cut the holding period for the Seller's Stamp Duty and lowered the rates as speculative property flipping had fallen markedly, he said at the MAS Annual Report's release.

The Government also tweaked home loan curbs by excluding mortgage equity withdrawal loans with loan-to-value ratios of 50 per cent or less from the total debt servicing ratio framework, which limits the amount home buyers can borrow.

That was to give home owners greater flexibility to monetise their properties for retirement needs.

However, the remaining cooling measures - rolled out progressively since 2009 - are still necessary as underlying demand for private residential properties continues to be firm in an environment of persistently low interest rates, he said.

Also, investors continue to search for yield and safety in property markets around the world, he noted.

"Regional property markets have been buoyant, and their respective authorities have, in the past six months, introduced further property cooling measures," he said.

"Easing the measures now would send a wrong signal."

Developers here have also been active despite the cooling measures, putting in bullish bids for recent Government Land Sales tenders.

NO SURPRISE

ANZ economist Ng Weiwen said MAS' stance did not surprise him, given that property prices have not declined much from their peak.

"If domestic interest rates were to rise significantly, those who bought their properties in the last few years, when prices were very high, will have difficulty financing their mortgages, especially if they had taken up floating rate packages," he said.

The comments come as the MAS caps a robust year. After contribution to the Consolidated Fund, it made a net profit of $24.3 billion in the financial year ended March 31.

This is a record profit, but Mr Menon noted that the MAS' profit and loss outcomes are subject to sharp swings and do not reflect its underlying investment approach, which is conservative and emphasises steady, long-term returns.