Will new loan limits, 15-month wait period finally cool property demand?

by Albert02

Will new loan limits, 15-month wait period finally cool property demand?

Will new loan limits, 15-month wait period finally cool property demand?

The Monetary Authority of Singapore (MAS), the Ministry of National Development (MND), and the Housing Board (HDB) unveiled a new wave of cooling measures late on Thursday (Sep 29), including tougher lending restrictions for housing. They also implemented a new 15-month waiting period for PPOs interested in HDB resale flats, which is widely expected to decrease demand in the downgrading segment. In the face of rising interest rates, the government is attempting to assure careful borrowing and restrain demand. According to a joint announcement from MAS, MND, and HDB, this is to avoid future problems with home maintenance.

Here are some quick reactions to the recent round of cooling measures from real estate analysts:


CBRE head of research, South-east Asia, Tricia Song:

“The most recent wave of cooling measures has had a more severe impact on the HDB resale market, particularly the larger 5-room and executive HDB flats, which may see less demand from private house downgraders or en bloc sellers, and prices should be adjusted as a result,” says the report.

“In turn, lower HDB resale prices may limit upgraders’ ability and hence demand for private homes, which have recently topped S$2,000 per square foot (psf) in the outside central region, closing the price gap with higher-end segments.”

“Some HDB sellers who dissociated from selling high-priced HDB flats and used the proceeds to purchase investment private property would also be impacted.”

“En bloc sellers may have one less alternative lodging option, which could potentially drive up selling price expectations, deter developers even more following the recently raised land improvement taxes, and ultimately restrict private home supply in the medium to long term.”

ERA Realty Network chief executive Marcus Chu:

“The goal of this package of cooling measures is to limit loan funding, which is the fuel that supports the property market’s expansion.”

“However, underlying real estate demand remains quite robust for a variety of reasons, including the need to hedge against excessive inflation.”

“This wave of property restrictions will encourage buyers to be more financially responsible,” which will benefit the property market in the medium to long term by reducing financial risks connected with rising interest rates.

Click the image to read the full details of report.

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