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Budget 2014: Too early to ease property cooling measures, says Tharman

The Singapore government plans to keep property market cooling measures in place for the time being, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam in his Budget Speech on Friday.

SINGAPORE: The Singapore government plans to keep property market cooling measures in place for the time being, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Friday, even as real-estate prices have shown signs of stabilising after large increases in recent years.

"Given the run-up in prices in the last four years, it is too early to start relaxing our measures," Mr. Tharman told Parliament in his annual Budget Speech.

He said the cooling measures have been aimed at moderating the market so that property prices do not get too far out of line with incomes.

Mr Tharman said the government is not engineering a hard landing. However, it cannot eliminate cycles in the property market -- the upswings in some years followed by corrections.

"The government will continue to monitor the property market in the coming quarters and adjust our measures when necessary," he added.

Mr Tharman's comments came after government data published in January showed private home prices in Singapore fell in the fourth quarter from the third, snapping six straight quarters of growth as the property cooling measures curbed real-estate investment.

Property analysts say the decline -- the first in nearly two years -- could portend further price falls this year, when large supplies of new homes are expected to reach the market amid a rise in interest rates.

Singapore has repeatedly tried to temper exuberance in its property market in recent years, imposing cooling measures since September 2009 to combat upward price pressures from low interest rates and abundant capital inflows.

The government imposed curbs, most recently in June -- tightening property loan rules to discourage imprudent borrowing. The Total Debt Servicing Ratio affects affordability by restricting a borrower's property loans to below 60 per cent of his or her gross monthly income.

These followed January measures that mainly targeted foreign investors and residents who already owned homes -- stamp duties and down-payment requirements were raised, while borrowing caps were tightened.

Singapore's private residential property price index fell 0.9% in the fourth quarter of 2013 to 214.3 points. Prices last fell in the first quarter of 2012 before rising by 5% in the 18 months up to September.

The fourth-quarter price decline marked the private housing market's worst showing since the second quarter of 2009 when prices fell 4.7% from the quarter before.

Despite the latest drop, private home prices are up 61% since the end of June 2009.  

Budget 2014 Statement (PDF 496.09KB)

Budget 2014 In Brief (Ministry of Finance) (PDF 1.76MB)

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