As a former journalist, I can understand how readers can misconstrue what is reported. Does a drop in sales percentage equate to a drop in price? Not necessarily. Relationship between the two is converse. Thus low sales means either price is holding or is still high. Hence, the government has introduced cooling measures such as Additional Buyers' Stamp Duty, Total Debt Servicing Ratio and the Mortgage Servicing Ratio to induce an ideal balance between supply and demand and hence allow prices to adjust favourably. The aim is never to affect the value of properties, but only to compress the upward spiralling of property prices.
How does the cooling measures work to manage the property market?
The TDSR is imposed by Monetary Authority of Singapore (MAS) and is pegged at 60% of income. For example, should you be drawing a monthly salary of $10,000, you are only allowed to use up to $6, 000 for the servicing of your monthly mortgage instalments. However, any other loans on hand -- credit card, current mortgage, personal loans, etc... -- will impact on the mortgage quantum that the bank will extend to you.
MSR is used for HDB and Executive Condo purchases. Buyers are allowed to mobilise only 30% of their household income. So for a $10,000 monthly household income, one is only allowed to use $3,000 for monthly mortgage servicing.
News report have shown that Singaporeans are one of the most affluent people in the world and thus the only way to curtail property purchase is to manage their loan ability. So far, Minister for National Development, Khaw Boon Wan has reported the success of the cooling measures in slowing down the market. The catchphrase is "slow down" and not to reduce prices or depress the property market.
For more information on TDSR and MSR, please click onto the links below.
http://www.mas.gov.sg/news-and-publications/press-releases/2013/mas-introduces-debt-servicing-framework-for-property-loans.aspx
http://app.mnd.gov.sg/Newsroom/NewsPage.aspx?ID=5023&category=Press+Release&year=2013&RA1&RA2&RA3
*This article is a basic overview of the current property market. For more information please refer to IRAS and HDB websites.
