Property here may sizzle from QE3 heat

Property here may sizzle from QE3 heat

The possibility of a fresh wave of capital flows into Singapore as a result of the latest round of quantitative easing (QE3) in the United States has raised the prospect that the property market could heat up again. This, in turn, could lead to a new round of government measures to keep prices in check.

The Federal Reserve's decision to pump US$40 billion into the US economy each month until sustained jobs growth kicks in, while welcome news for the struggling global economy, also created fears that loose monetary conditions in the US may push funds into the region in search of yields and fan asset price inflation.

An influx of foreign funds into the property market here could well push the government to introduce new measures or tweak existing ones to prevent a bubble from forming, said economists and property consultants.

Already in the region, Hong Kong has moved swiftly to introduce mortgage curbs. In its fifth round of mortgage-tightening measures, the Hong Kong Monetary Authority announced that it would limit the Cashmaximum term of all new mortgages to 30 years.

Additionally, mortgage payments for investment properties cannot be more than 40 per cent of buyer's monthly incomes, compared with 50 per cent previously.

The government has repeatedly stated that it remains ready to take further action to cool the property market should the situation call for it.

Source: Business Times – 18 September 2012