November 10, 2009
Possible Property Bubble Has Singapore Officials Worried
By REUTERS
SINGAPORE — The Singapore central bank warned Monday that more measures could be needed to curb the risk of speculation in the country’s property market, which has been bolstered by low borrowing costs.
The comments underscored a growing concern among policy makers in Asia, who are worried about the possibility of a bubble in residential markets in financial centers like Hong Kong, Singapore and Seoul.
“As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted,” the Monetary Authority of Singapore, the country’s central bank, said in its annual Financial Stability Review. “More measures might then be necessary.”
In September, Singapore moved to cool the property market by releasing more land and making it harder for home buyers to defer payments.
Last month, the Hong Kong Monetary Authority said it would lower the mortgage limit for luxury property to 60 percent from 70 percent and limit loan values. The South Korean central bank has warned that it would have to raise rates if property prices continued to soar.
The Monetary Authority of Singapore said property market activity had taken on dynamics of its own, despite the lingering economic uncertainties in the island-state and around the world. The authority also warned that a rally in global financial market had outpaced economic fundamentals, and that any perception that the economic recovery was stalling could bring a repricing of financial assets.
It said the rally in Asian asset prices since the first quarter of 2009 had been supported by extensive stimulus policies around the world, but asset prices might prove weak once those policies were scaled back. “Such market volatility could prompt capital outflows from Asia and, in turn, exchange rate volatility,” the authority said.
Asian stocks, as measured by the MSCI index of Asian shares traded outside Japan, have climbed 60 percent this year, outperforming a 27 percent increase in the MSCI world equity index.
The authority said some Asian economies might need to tighten monetary policies before policies were changed in the world’s largest economies, particularly the United States, but the central bank expressed concern about doing so before any significant change of direction by the Group of 3 economies — the United States, Japan and the euro zone. It said such a development could entail “a risk of asset price bubbles.”
Reuters
Possible Property Bubble Has Singapore Officials Worried
By REUTERS
SINGAPORE — The Singapore central bank warned Monday that more measures could be needed to curb the risk of speculation in the country’s property market, which has been bolstered by low borrowing costs.
The comments underscored a growing concern among policy makers in Asia, who are worried about the possibility of a bubble in residential markets in financial centers like Hong Kong, Singapore and Seoul.
“As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted,” the Monetary Authority of Singapore, the country’s central bank, said in its annual Financial Stability Review. “More measures might then be necessary.”
In September, Singapore moved to cool the property market by releasing more land and making it harder for home buyers to defer payments.
Last month, the Hong Kong Monetary Authority said it would lower the mortgage limit for luxury property to 60 percent from 70 percent and limit loan values. The South Korean central bank has warned that it would have to raise rates if property prices continued to soar.
The Monetary Authority of Singapore said property market activity had taken on dynamics of its own, despite the lingering economic uncertainties in the island-state and around the world. The authority also warned that a rally in global financial market had outpaced economic fundamentals, and that any perception that the economic recovery was stalling could bring a repricing of financial assets.
It said the rally in Asian asset prices since the first quarter of 2009 had been supported by extensive stimulus policies around the world, but asset prices might prove weak once those policies were scaled back. “Such market volatility could prompt capital outflows from Asia and, in turn, exchange rate volatility,” the authority said.
Asian stocks, as measured by the MSCI index of Asian shares traded outside Japan, have climbed 60 percent this year, outperforming a 27 percent increase in the MSCI world equity index.
The authority said some Asian economies might need to tighten monetary policies before policies were changed in the world’s largest economies, particularly the United States, but the central bank expressed concern about doing so before any significant change of direction by the Group of 3 economies — the United States, Japan and the euro zone. It said such a development could entail “a risk of asset price bubbles.”
Reuters
