Despite increasing property prices, housing affordability in Singapore is likely to remain sound.
With low interest rates offsetting the impact of increasing property prices, Moody’s Investors Service expects housing affordability in Singapore to worsen slightly, but remain sound over 2021 to 2022, reported Singapore Business Review (SBR).
“Private residential property prices in Singapore will further increase over the next 18 months supported by strong demand. However, the government has signalled that it will impose cooling measures if house prices soar, potentially curbing growth over the rest of 2021 and 2022 compared with 2020,” said Moody’s Assistant Vice President and Analyst Dipanshu Rustagi.
Moody’s believes the sound housing affordability would support the credit quality of loans within covered bond mortgage pools.
And with major advanced economies taking on an “accommodative monetary policy” stance, the city-state’s mortgage interest is expected to remain low for the rest of 2021, said Moody’s. Nonetheless, interest rates are forecasted to pick up next year as the global economy recovers slightly.
“As a result, housing affordability – the share of household income borrowers need to meet monthly home loan repayments for a typical new mortgage in Singapore – will worsen slightly over the next 12-18 months but stay low,” it said as quoted by SBR.
Moody’s sees Singapore household income remaining stable during the rest of 2021 and next year, indicating improvements in the economy and job market. Notably, the unemployment rate in Singapore fell from 3.5% in September 2020 to 2.7% in June 2021, albeit remaining above pre-COVID-19 pandemic levels due to disruptions in some sectors like hospitality and aviation.
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg.
