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RESIDENTIAL PROPERTY | Staff Reporter, Singapore
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How will interest rate hikes affect Singapore’s property market?

There won’t be a drastic slowdown, analysts say.

Singapore’s residential property market will not suffer too much from the effects of higher interest rates, according to JLL.

The adverse impact of higher borrowing costs had already been mitigated by the implementation of the Total Debt Servicing Ratio (TDSR), said Dr Chua Yang Liang, Head of Research Southeast Asia and Singapore.

Under the TDSR, the Monetary Authority of Singapore policy requires banks to use an interest rate of 3.5 percent for residential loans and 4.5 percent for non-residential property loans to curb excessive borrowing and keep a lid on household leverage.

“Some asset yields should ease marginally to accommodate the gradual rise in lending rates but otherwise, we do not foresee a drastic downshift in the property market here as a result of this recent hike,” Dr. Chua added.

Despite this, risks remain particularly if domestic rates were to climb too drastically and if the local and regional economies weaken further.

“This will have an adverse impact on the property market as households struggle to meet higher loan repayments amid a weak leasing market,” Dr Chua said.
 

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