Property bubble unlikely in Singapore

The chance of a property bubble in Singapore is very slim as housing loans only account for a small portion of property values, according to comments from Citigroup which were reported in the media. Based on its analysis of government data, the country’s $203 billion worth of mortgages amounted to 24.2 percent of the value of residential properties in Q3 2013.

“Nobody has walked me through the mechanics of a total crash of the real estate market for it to be compelling,” said Michael Zink, Head of Citi’s ASEAN operations. “Ninety percent of households (in Singapore) live in a home that they own, so where’s the bubble?” he asked, adding that many households here are financially very stable.

In addition, about 82 percent of Singaporeans live in public housing and most of them have already paid off their mortgages, noted Singapore-based Zink, who has lived in other Asian cities such as Jakarta and Guangzhou. “The potential for a bubble has been greatly deflated” thanks to the government’s series of property cooling measures, especially the TDSR framework imposed last June, added Nicholas Mak, Executive Director and Head of Research at SLP International Property Consultants.

Following a recent Forbes article claiming that the city-state is heading for an “Iceland-style meltdown”, the Monetary Authority of Singapore (MAS) said last month that household balance sheets here have strengthened, while new housing loans have declined.

Source: PropertyGuru

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