The Unassuming Economist

In Singapore, “indicators of housing affordability are mixed. House prices have risen more quickly than median incomes, especially for HDB resale housing. In addition, the tighter LtV ceilings raise the bar on qualifying for a housing loan. On the other hand, all-time low mortgage interest rates (about 70 percent of which are at floating rates, currently between 1⅓ percent and 2 percent) have reduced debt servicing costs,” according to a new IMF report on Singapore.

Moreover, it says “Following successive rounds of policy tightening, together with external factors, home prices have remained flat since end˗2011, while the volume of transactions has declined noticeably. In particular, the share of foreign buyers collapsed in Q1:2012 to 5½ percent as a result of new macroprudential measures targeting foreigners and weakening external investment sentiment, with buyers from China falling by nearly 50 percent. The more-than-proportionate decline in purchases by Mainland Chinese may reflect the impact of the economic slowdown in China. Transactions in the luxury market have also fallen. However, the share in total transactions of “shoe box” apartments (with an area of less than 50 square meters) doubled in Q1:2012 to close to 20 percent. While this may reflect the characteristics of new supply coming on-stream, demand for such housing is strong, possibly because of the reduced affordability of standard-size units.”