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HomeAdviceA Manipulated Market?

A Manipulated Market?

Is Singapore’s property market truly an open market? Is it better to be open and free, or controlled?

Despite our government’s stance that the real estate market operates on a laissez-faire model, in reality, they constantly monitor the market. Why is that so?

Singapore boasts a renowned economy that is safe and secure. Both local and foreign investors love Singapore as a safe haven to preserve and grow their wealth. A significant portion of the influx of cash that investors bring in is spent on real estate. While this phenomenon is good for the nation’s GDP and economy, without control, negative effects will occur. One such effect is property prices soaring too high too fast due to demand outweighing supply, ultimately leading to a situation where the local working class will be priced out of the market and face difficulty buying their own home. So, how does the government prevent our property market from entering into a bubble and subsequently bursting?

One measure is called the Total Debt Servicing Ratio (TDSR).

This is a stress test for every homeowner/investor who wishes to purchase a property with a loan or use their CPF to finance the home. The current stress test interest rates are at 4.5 – 4.8%, depending on the approved financial institutions. This means that interest rates are conservatively increased to ensure homeowners can sustain the monthly mortgages at these high rates, even though actual rates may be lower. Banks will approve the loans in principle based on these heavy stress tests to ensure consumers do not over-leverage.

Another element of TDSR is the 55% cap based on income. This literally means that if you have an income of $10,000 a month, $5,500 is the maximum you can use to pay for your mortgage per month. This is to ensure consumers do not over-borrow. These are critical measures that are here to stay so that the overall market does not enter into a bubble.

Does this measure count as a way the Singapore government controls the market? Do you think Singaporeans benefited from this measure? Have you been unable to get a higher loan due to TDSR?

This measure might have helped you in your property journey, preventing you from over-borrowing for a property, resulting in a forced sale if you can’t afford to pay for your mortgage.

Hence, this cooling measure has resulted in fewer mortgage/fire sales in this market today.

Damien Lim


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