The movement is spreading fast. Singapore has progressively joined the legion of nations moving to install macroprudential policies to control asset prices and suppress currencies. From Bloomberg:
The government this year ramped up efforts to bring down property prices that surged to a record, adopting some of its strictest measures, including a cap on debt at 60 percent of a borrower’s income, higher stamp duties on home purchases and an increase in real-estate taxes. The combination and timing of the curbs is the most comprehensive among governments battling housing bubbles, according to Vishnu Varathan, an economist at Mizuho Bank Ltd.
The curbs are proving more successful than in Hong Kong and China where policy makers have experimented with a variety of initiatives to temper soaring housing markets. Home prices in Singapore have gained 33 percent since 2009, while they have more than doubled in Hong Kong in the period.
“The government has enacted all these measures quite early,” Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte, the securities unit of Southeast Asia’s third-largest lender, United Overseas Bank Ltd. (UOB), said. “They want to contain a bubble from reaching levels where it brings down the whole system.”
Home prices in Singapore had the slowest growth in six quarters in the three months ended Sept. 30. Sales declined and mortgage growth fell to 13 percent in July from 18 percent two years ago.
The city-state, on an island off the southern tip of the Malay Peninsula, began introducing curbs four years ago after home prices climbed 25 percent in the two years to 2008. The government of Prime Minister Lee Hsien Loong intensified efforts as prices jumped a further 40 percent, driven by low interest rates, demand from local Singaporeans to upgrade from government to private housing, as well as buyers from China and Southeast Asia.
…In Singapore, the government raised the minimum down-payment on second-home purchases, brought in new taxes for foreign and corporate buyers, and added a stamp duty for all residential properties. The Monetary Authority of Singapore said June 28 that home loans should not exceed a total debt-servicing ratio of 60 percent. In August, the central bank then cut the maximum period for new loans to buy public housing, where about 80 percent of Singaporeans live, by five years to 25 years. Mortgage payments were capped at 30 percent of gross monthly incomes, down from 35 percent, according to the Housing & Development Board.
“The loan measures are more lethal than the other measures,” said David Neubronner, national director of residential project sales in Singapore at broker Jones Lang LaSalle Inc. (JLL) “Home prices will remain flat for the next six to nine months.”
It is interesting to watch these measures roll out. If they get widespread enough then those without them may find themselves paying more for their debt.
