SINGAPORE – The Monetary Authority of Singapore (MAS) managing director Ravi Menon has advised developers, home buyers and banks to exercise caution amid “euphoria” in the current property market.
Mr Menon said that while the recovery seen over the past few quarters is welcomed, the rise in property prices should be in line with economic fundamentals and not get ahead of income growth.
“There is euphoria now. Everything looks good… Basically, we’re sounding cautions to everyone to be sober, to be balanced and exercise good judgement,” Mr Menon said.
Speaking at the central bank’s annual report media briefing on Wednesday (July 4), Mr Menon said developers should bear in mind the increase in supply of new residential units coming on stream when they make their land bids.
“We’re also telling individuals who purchase property to be careful, to be cautious, interest rates are rising, to be cautious of debt servicing burdens, so as to avoid taking on too much leverage when they buy houses,” he added.
He also advised banks to be careful when assessing whether to approve mortgage loans to their clients and to make sure that they subject their underwriting to stress tests against future scenarios.
The warnings come on the back of a gradual rise in property prices since its trough in the third quarter of 2017.
Mr Menon said the MAS is closely watching the property market.
Flash estimates from the Urban Redevelopment Authority on Monday (July 2) showed that private property prices have jumped to its highest in four years. Analysts expect prices to increase further, aided by the surge in en bloc sales as well as record-high prices submitted in government land bids over the last two years.