A CLSA report suggests that property measures could be implemented if residential property prices continue to rise. Residential property prices rose 2.7% year-to-date for the nine months to end-Sept. Sales volume appears to be on track for 10,000 to 11,000 units for this year. New supply isn’t excessive at 36,814 units with around 50% pre-sold. Most buyers - 98%- are locals or permanent residents. The heightened interest in physical property is likely to be a result of low mortgage rates, suggests a CLSA report dated Nov 27. These are as low as 1.5%. Three-month compounded Sora is at 1.2496% as of Nov 27.
“With home sales volumes reaching new highs, since 2021, fuelled by falling mortgage rates and prices firming, we believe the government could potentially introduce further cooling measures on the residential market if price growth is viewed as excessive,” CLSA says, in its report.
The lure of lower mortgage rates could fuel the property market and contribute to rising household debt, an area of concern for the government, the report adds.
“We believe the next property measures could come from the further tightening of the loan-to-value (LTV) limits by five percentage points and a further reduction of the total debt servicing ratio (TDSR) from 55% to 50%,” the CLSA report says. LTV for first-time home buyers is 75% compared with 80% for Sydney, New York, Dubai and Shanghai, and 95% for London, according to CLSA.
