Regression analysis by the International Monetary Fund using data from 1Q2004 to 3Q2018 showed that speculative activity and transactions by foreigners and corporates were significantly related, and were the principal drivers of private residential property price increases in Singapore.
SINGAPORE (Dec 2): The Financial Stability Review (FSR) released by the Monetary Authority of Singapore on Nov 28 highlights the risk of an economic slowdown, but this has not caused systemic problems and unemployment remains in check. Still, given slowing GDP growth this year, MAS says labour demand could moderate in the near term.
Slowing economic growth and a softer labour market could negatively affect household incomes and their ability to service mortgages. So far, MAS’s simulations indicate that, in general, households’ mortgage servicing ratios would remain manageable under stress situations. The MSR for the median household remains below 60% under a severe stress scenario of a 10% fall in income, on top of a 250-basis-point increase in mortgage rates (Singapore Interbank Offered Rates [Sibor] and Swap Offer Rates have fallen this year). Lower-income households that have purchased private properties could face increased stress, however, as their mortgage servicing burdens rise above 70%.
