Potential changes in property market to look out for

Following the impact made by July’s property cooling measures, the real estate market here may have a couple more changes in the months ahead to juggle.

The Criterion condo, Yishun. Picture: iProperty

Rise in home loan rates could happen soon

The Monetary Authority of Singapore (MAS) has recently cautioned property buyers against loaning over their debt-servicing limit and ability.

According to the MAS’ Financial Stability Review, household debt grew 3% in the third quarter, and there was also a 3.4% increase in housing loans in the same period. Hence, they are voicing their concerns over the rising debt-servicing burdens buyers place upon themselves.

See moreNew private home sales fell last month due to the lack of launches

Housing loans have remained low for quite some time now, and a rise seems imminent.

These have been a rising popularity in home-ownership and residential property investment over the past year, with a 30% growth in new housing loans in the 12 months leading up to July this year.

Increase in housing supply in the medium term

The other factor which could impact the real estate market and property buyers is the increase of housing supply in the medium term.

With a large number of en bloc sales within the last 2 years, the market is likely to see a sudden and quick increase in new properties in the next few years. This could increase competition, put the squeeze on prices and depress the rental market even further.

See more: Mandarin Gardens increase en-bloc asking price by almost half a billion

MAS is advising property buyers to be reticent in their buying decisions and be more wary about their debt-servicing burdens as over-leveraged households are more likely to suffer when property prices are corrected sharply.

July’s property curbs could, however, aid in long-term stability.

The increase in Additional Buyers’ Stamp Duty (ABSD) meant buyers who were purchasing their second and subsequent properties have to pay more in stamp duties. The loan limit was also tightened, which mean buyers were unable to loan as much as before.