IN THE face of rising external risks, Singapore policymakers may have chosen to introduce the latest round of property cooling measures sooner rather than later, say economists.
"The main thing is being very pre-emptive," said UOB economist Francis Tan, adding that cooling the market now could help reduce any future volatility.
Thursday's announcement of higher additional buyer's stamp duty rates and stricter loan-to-value limits on residential property purchases came as a surprise to the industry.
It was, to an extent, foreshadowed by Monetary Authority of Singapore managing director Ravi Menon's remarks that "euphoria" in the property market called for caution, at Wednesday's media conference on the central bank's annual report.
Still, the move came earlier than anticipated, said ERA Realty key executive officer Eugene Lim. "We sort of expected that the government may step in, but did not expect it to be so immediate."
Economists cited mounting trade tensions between the United States and China - with the latest rounds of tariffs kicking in on July 6 - and rising interest rates as factors that may have prompted policymakers to act early.
"I think policymakers are worried that a property market bubble is under way. But external risks have risen since Trump is set on escalating the trade fight with major trading partners," said CIMB Private Bank economist Song Seng Wun.
"This is probably why they acted much more proactively than any time before."
DBS economist Irvin Seah cited the macroeconomic backdrop of rising interest rates as a possible source of worry for policymakers: "This could be a concern if the homebuyers or property investors get themselves overextended."
The cooling measures can therefore be seen as a protective move, he added.
Singapore's move is not entirely surprising in the regional context, said OCBC economist Selena Ling, observing that Hong Kong recently implemented property market curbs as well.
One possible consideration, she added, is "that some of the foreign interests, especially from China, may be coming back again".
It is possible that with current global uncertainty, foreign investors might be seeking safer places to park their money, driving up interest in Singapore properties.
"There could be a little bit of that story."
But the immediate factors are still the appreciation of property prices over the last two quarters and the continued en bloc fever, she added.
Adapted from The Business Times, 7 July 2018.