## 1sgpea2019004

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### Executive summary and introduction
- Macroprudential policy in Singapore centers on the property market because residential property:
  - Represents nearly half of total household assets.
  - Is the largest component in household balance sheets.
  - Accounts for about three quarters of total household liabilities via housing loans.
- Property-related loans account for about 30 percent of bank lending to non-banks.
- This Technical Note assesses institutional arrangements, systemic risk monitoring, and the macroprudential toolkit, with focus on price effects of macroprudential instruments.

### Institutional framework: willingness, ability, coordination
- Willingness to act
  - Legislative amendments to the MAS Act in July 2017 prioritize MAS’ supervision and financial stability objectives.
  - Macroprudential mandate assigned to MAS committees:
    - Management Financial Stability Committee (chaired by the MAS Managing Director): assesses systemic risks, formulates macroprudential policies, facilitates interaction with other authorities.
    - Management Financial Supervision Committee (chaired by the Deputy Managing Director in charge of financial supervision): discusses regulatory/supervisory matters weekly; may refer financial stability matters to the Management Financial Stability Committee.
    - Chairman’s Meeting (board-level committee chaired by the MAS Chairman, includes MAS Deputy Chairman, the Managing Director, and two board members who are currently government ministers): approves major policy decisions relating to financial stability and the regulatory and supervisory framework.
  - Communication tools supporting accountability:
    - Annual Financial Stability Review.
    - Annual Report and press conference by the MAS Managing Director.
    - Press releases announcing macroprudential policy measures and joint press releases when multiple authorities involved.
  - MAS has a dedicated Macroprudential Surveillance Department (around 20 staff) within the Financial Supervision Group.
- Ability to act
  - MAS is central bank and integrated financial supervisor; has hard powers under legislations (e.g., the Banking Act and the Financial Companies Act) to apply policy tools for macroprudential purposes.
- Effective coordination and cooperation
  - Domestic coordination benefits from concentration of responsibilities in MAS.
  - An interagency taskforce on the property market includes MAS, the Ministry of Finance, and the Ministry of National Development for data sharing and surveillance.
  - MAS has memoranda of understanding with foreign supervisors and reciprocity arrangements (e.g., for the countercyclical capital buffer).

### Systemic risk monitoring and data
- Surveillance and tools
  - MAS uses comprehensive quantitative information, industry dialogue, property market models, top-down and bottom-up stress tests, and household solvency stress tests based on granular mortgage debt information.
- Data collection powers and enhancements
  - MAS collects data via supervisory returns, commercial sources, regular/ad hoc surveys.
  - Enhancing banking regulatory returns (MAS Notice 610) with full implementation planned for October 2020 to improve granularity (assets and liabilities by currency, country, counterparty type).
  - MAS collects account-level information on borrowers and new housing loans via a monthly Housing Loan Profile Survey and is exploring broadening account-level collection for outstanding housing loans.
- Data gaps and recommended improvements
  - Develop sectoral flow of funds accounts (flow of funds).
  - Collect borrower-level information on stocks of property-related loans:
    - Medium-term priority: mortgage loans for households.
    - Longer-term: other loan types to households and non-financial companies.
  - Rationale: current household stress-testing uses sensitivity of debt service burden of new loans only; stock-level account data would permit modelling probabilities of default and more accurate vulnerability assessment.

### Property market structure and mortgage exposures
- Two-tier housing market
  - About 80 percent of Singapore residents live in public housing.
  - Housing composition as of end-June 2017:
    - HDB flats: 72.6 percent of residential dwelling units.
    - Private apartments and condominiums: 21.3 percent.
    - Landed homes: 5.2 percent.
    - Other housing units: less than 1 percent.
  - Homeownership rate: over 90 percent.
  - Eligibility: only Singaporean households with monthly income of S$12,000 and below eligible to purchase new HDB flats; EC direct purchase requires monthly income of S$14,000 and below.
  - Tenures: HDB flats typically 99-year lease; private properties freehold or 999-year leasehold.
- Mortgage contributions to total mortgages (2018Q2)
  - Public housing contributes about 52 percent of total mortgages to households.
  - HDB-originated mortgages: 16 percent of total mortgages.
  - Commercial banks’ extension of mortgages to public housing: about 35 percent of total mortgages.
  - Loans for private properties: 48 percent of total mortgages and exclusively granted by commercial banks.
  - Private property loans represent almost 60 percent of banks’ mortgages to households.
- Mortgage product features and trends
  - HDB mortgage rates pegged to Central Provident Fund interest rate (unchanged for past 20 years).
  - Share of outstanding housing loans on fixed-rate or fixed-deposit-linked packages tripled since end-2015 to 54 percent as of 2018Q2.

### Property market dynamics, speculative activity, and policy measures
- Price dynamics and volatility
  - Private residential market prices increased by almost 16 percent between 2010 and 2013.
  - Private residential property prices increased 9.1 percent, y-o-y in 2018Q2 (highest since 2011).
  - Prices stabilized and by 2017Q3 were about 12 percent below the 2013 peak.
- Speculative indicators
  - Short-term resales and foreigners’ purchases were elevated before 2013; foreigners’ purchases peaked at about 20 percent of all transactions in 2011.
  - Corporate purchases and en-bloc transactions rose during 2017–2018 pickup while foreigners’ purchases remained low.
- Authorities’ multipronged approach
  - Demand-side: LTV limits, Total Debt Servicing Ratio (TDSR).
  - Fiscal-based: Seller’s Stamp Duty (SSD) and Additional Buyer’s Stamp Duty (ABSD).
  - Supply-side: public housing construction program reviewed yearly; Government Land Sales (GLS) program reviewed every six months.
- Effects of July 2018 measures
  - Total transaction volumes dropped by more than 25 percent in 2018Q3 versus previous quarter.
  - Growth of private residential prices decreased following measures.

### Macroprudential toolkit, calibrations and timeline (selected)
- System-wide and bank buffers
  - Countercyclical capital buffer (CCyB): Implemented since January 1, 2016; decisions pre-announced up to 12 months and at least annually in MAS FSR; currently set at zero percent (as communicated in November 2018 FSR).
  - Capital conservation buffer (CCB): From January 1, 2019, Singapore-incorporated banks need CCB of 2.5 percent (increased from 1.875 percent) of CET1.
  - Liquidity Coverage Ratio (LCR): phased from January 1, 2015; all-currency LCR for three local banking groups started at 60 percent on January 1, 2015 and increased 10 percent annually to reach 100 percent on January 1, 2019; SGD LCR requirement of 100 percent from January 1, 2015 for those banks.
  - Net Stable Funding Ratio (NSFR): All D-SIBs required to meet NSFR on an all-currency level from January 1, 2018; all-currency NSFR requirement is 100 percent for the three local banking groups and 50 percent for other D-SIBs.
- Household sector loan measures (July 2018 and earlier)
  - Maximum LTV on loans granted by financial institutions (July 2018):
    - 1st Housing Loan: 75 percent; or 55 percent if loan tenure >30 years (25 years where property is HDB flat) or extends past age 65.
    - 2nd Housing Loan: 45 percent; or 25 percent if loan tenure >30 years (25 years for HDB flat) or extends past age 65.
    - From 3rd Housing Loan: 35 percent; or 15 percent if loan tenure >30 years (25 years for HDB flat) or extends past age 65.
    - Non-individual borrowers: 15 percent.
  - Total Debt Servicing Ratio (TDSR): 60-percent maximum ratio applicable to all loans, except mortgage equity withdrawal loans with LTV ratios of 50 percent and below (March 2017).
  - Mortgage Servicing Ratio (MSR) for HDB flats and ECs: capped at 30 percent of borrower’s gross monthly income (December 2013).
  - Elimination of interest-only mortgages: disallowed (September 2009).
  - Maximum tenure:
    - Private properties and ECs: absolute limit of 35 years (October 2012).
    - HDB loans maximum tenure 25 years; financial institutions’ loans for HDB purchases maximum tenure 30 years (August 2013).
  - Minimum Cash Down Payment:
    - 1st Housing Loan: 5 percent; or 10 percent if loan tenure >30 years or extends past age 65.
    - From 2nd Housing Loan: 25 percent (January 2013).
  - Seller’s Stamp Duty (SSD): holding periods up to three years with rates ranging from 4 percent (for properties sold in the third year) to 12 percent (for those sold within the first year) (March 2017).
  - Additional Buyer’s Stamp Duty (ABSD) residency-based calibrations (July 2018):
    - 12 percent for Singapore Citizens buying their 2nd residential property.
    - 15 percent for SCs buying their 3rd and subsequent residential property.
    - 5 percent for Singapore Permanent Residents buying their 1st residential property.
    - 15 percent for SPRs buying their 2nd and subsequent residential property.
    - 20 percent for foreigners.
    - 25 percent for entities.
    - 30 percent for housing developers (with 25 percent remittable, subject to conditions).
- Corporate-sector cap
  - Total property-related exposure of a bank capped at 35 percent of total eligible assets.

### Systemic vulnerabilities and stress-test findings
- Overall assessment: financial system generally healthy but with pockets of vulnerabilities.
- Banks
  - Locally incorporated D-SIBs maintain risk-based capital ratios above regulatory minima in adverse scenarios.
  - Exposures: property market risks, legacy loans to transportation sector, name concentration risk.
  - D-SIBs’ liquidity coverage ratios show shortfalls of liquid U.S. dollar assets of up to 20 percent of GDP; many banks fail USD liquidity stress tests, implying reliance on stable domestic currency value.
- Insurers
  - Stress tests show solvency position vulnerability but resulting capital shortfalls are very small and not systemic.
- Interconnectedness
  - Domestic contagion via direct interlinkages between banks and non-bank financial institutions limited; cross-border interbank exposures and market volatility are contagion channels.
  - Singapore banks have more outward than inward spillover effects for Asian neighbors.
- Households
  - Under severe stress, mortgage servicing burden for households purchasing private housing generally remains below 60 percent; a small segment (monthly income under S$7,500 and borrowers under 30) may see mortgage service-to-income ratio exceed 60 percent and face repayment difficulties.
- Corporates
  - Nonfinancial corporates have healthy debt servicing capacity and significant cash buffers; corporate debt-at-risk rises under stress but buffered by cash and foreign currency revenues.

### Household indebtedness and loan quality (2018 data)
- Household debt increased by 3.0 percent y-o-y in 2018Q3, mainly due to outstanding housing loans from financial institutions.
- Asset quality as of 2018Q4:
  - Share of loans more than 30 days in arrears: about 1 percent.
  - NPL ratio: less than 0.5 percent in 2018Q4 (unchanged from a year ago).
  - Share of new housing loans with LTV ratios under 70 percent rose from 37 to 45 percent from 2018Q2 to 2018Q4.
  - Distribution of outstanding housing loans by TDSR as of 2018Q4:
    - 53 percent had TDSR under 40 percent.
    - 43 percent had TDSR between 40 and 60 percent.
    - 5 percent had TDSR larger than 60 percent.
- Overall: despite some increase in LTV ratios, housing loan quality remained strong through 2018Q4.

### Empirical evidence on drivers of house prices and effects of measures
- Drivers and elasticities
  - Cross-country synchronization of house prices high before 2013; fell after 2013.
  - Regression evidence: one-standard deviation increases lead to quarterly price growth changes:
    - Short-term resales: +5.3 p.p. → +0.4 percentage points.
    - Foreigners’ purchases: +5.9 p.p. → +1.2 percentage points.
    - Corporate purchases: +8.5 p.p. → +0.5 percentage points.
  - Standard deviation of quarterly growth rate of private residential prices is 4 percentage points over the sample.
- MAS model counterfactuals (2002Q3–2014Q2)
  - Property prices would have been 17 percent higher without macroprudential measures.
  - Property prices would have been 10 percent higher without fiscal-based measures.
  - Property prices would have been more than 6 percent higher without supply measures.
  - Mortgage loans would have been almost 35 percent larger without macroprudential measures.
  - Mortgage loans would have been 27 percent higher without credit-based measures.
- Stamp duties, speculative activity, foreigners
  - Implementation of stamp duties followed by sharp reduction in short-term resales and foreigners’ purchases (foreign purchases dropped significantly after early 2012).
  - Yet prices continued to increase (albeit slower), indicating stamp duty-induced drops in speculative and foreign demand may not alone stabilize price levels.

### Dynamic effects of macroprudential measures (Appendix II findings)
- Method: three-dimensional panel and local projection (Jordà 2005) over 2004–2018, with MacroPruMeasure coded 1 for tightening, −1 for relaxation, 0 otherwise; controls include rent indices and fixed effects by property-type, region, time, region-time, and property type–region.
- Baseline dynamic coefficients for Macroprudential measure (2004–2018) at horizons (t to t+9):
  - t: 1.34
  - t+1: 0.90***
  - t+2: -0.74***
  - t+3: -2.07***
  - t+4: -4.40***
  - t+5: -6.29***
  - t+6: -6.75***
  - t+7: -1.94
  - t+8: -1.17
  - t+9: -1.69
  - Note: At peak (t+6) measures associated on average with a decrease in prices of almost 7 percent.
- Controlling for rents (2004–2018) — selected horizons:
  - t: 1.04
  - t+1: 0.18
  - t+2: -1.19**
  - t+3: -1.69***
  - t+4: -3.57***
  - t+5: -4.87***
  - t+6: -4.95***
  - t+7: -2.24*
  - t+8: -2.38**
  - t+9: -2.41**
  - Note: At peak, each measure translates into decrease in level of prices of almost 5 percent (lower-bound estimate).
- Timing and interpretation
  - Negative effects begin to materialize around third quarter after implementation and peak around six quarters (approximately 18 months).
  - Early positive coefficients up to two quarters often disappear when controlling for rent growth.
  - Results robust when excluding post-2013 period.
- Regional heterogeneity (CCR vs other regions)
  - Measures (SSD and ABSD) have significantly larger and more persistent impacts in Core Central Region (CCR), where speculative activity and foreigners’ and corporate purchases were highest.
  - Interaction coefficients for CCR at selected horizons (t to t+6) show larger negative impacts, with CCR peak effect more than 6 percentage points larger than other regions and persistence beyond two years.

### Policy assessment and key recommendations
- Assessment
  - Property-related measures increase resilience by moderating pro-cyclicality of credit and residential prices.
  - Stamp duties help limit excessive price increases by curbing speculators’ and foreigners’ demand and are argued to be less distortive than broad credit tightening.
  - Credit measures (TDSR, LTV limits) improve borrower debt service capacity, reduce speculative demand, lower default probability and loss given default for lenders.
- Key recommendations (Systemic Risk Monitoring; timeframe definitions: MT = medium-term = three to five years)
  - Develop sectoral financial accounts (flow of funds).
    - Responsible Authority: MAS/DOS
    - Timeframe: MT
  - Collect detailed information on the stock of property-related loans to the non-financial private sector (mortgage loans for households and property-related loans for non-financial companies).
    - Responsible Authority: MAS
    - Timeframe: MT

_International Monetary Fund (content unit: 1sgpea2019004)._

### EXECUTIVE SUMMARY __________________________________________________________________________ 5

### EXECUTIVE SUMMARY

### Introduction
- Macroprudential policy in Singapore has centered on the property market given its importance for households’ balance sheets, banks’ loan portfolios, and potential systemic risks.
- Residential property is the largest component in household balance sheets, representing nearly half of total household assets.
- Housing loans account for about three quarters of total household liabilities.
- Property-related loans account for about 30 percent of bank lending to non-banks.
- This Technical Note evaluates the macroprudential policy framework in Singapore with a focus on the price effect of macroprudential instruments and is structured to assess institutional arrangements, systemic risk monitoring, and the macroprudential toolkit.

### Institutional framework
H3: Willingness to Act
- Legislative amendments to the MAS Act in July 2017 prioritize MAS’ supervision and financial stability objectives vis-à-vis its developmental objective.
- The MAS Act states that one of the principal objects of the Authority is to foster a sound and reputable financial center and to promote financial stability; the financial stability objective is set out in section 4(1)(b) of the MAS Act.
- The macroprudential mandate is assigned to dedicated MAS committees, reducing dual-mandate risks:
  - Management Financial Stability Committee (chaired by the MAS Managing Director): assesses systemic risks, formulates macroprudential policies, and facilitates interaction with other government authorities.
  - Management Financial Supervision Committee (chaired by the Deputy Managing Director in charge of financial supervision): discusses regulatory and supervisory matters on a weekly basis and may refer financial stability matters to the Management Financial Stability Committee.
  - Chairman’s Meeting (board-level committee chaired by the MAS Chairman, comprising the MAS Deputy Chairman, the Managing Director, and two other board members who are currently government ministers) approves major policy decisions relating to financial stability and the regulatory and supervisory framework.
- MAS uses communication tools to support accountability:
  - Annual Financial Stability Review.
  - Annual Report and press conference by the MAS Managing Director.
  - Press releases announcing macroprudential policy measures, with explanations and joint press releases when multiple authorities are involved.
- MAS has a dedicated Macroprudential Surveillance Department (around 20 staff) within the Financial Supervision Group that assesses systemic risks and conducts macroprudential analysis.

H3: Ability to Act
- MAS is both the central bank and integrated financial supervisor, overseeing all financial institutions in Singapore and mandated to promote financial stability.
- MAS has (hard) powers under various legislations (e.g., the Banking Act and the Financial Companies Act) to apply policy tools for macroprudential purposes and currently uses a number of these tools in conjunction with other authorities to address housing market imbalances.

H3: Effective Coordination and Cooperation
- Domestic coordination is facilitated by the concentration of responsibilities in MAS, ensuring access to relevant information and facilitating crisis-time policy coordination (including monetary easing and emergency liquidity assistance).
- Some policy instruments relevant for property-market risks are controlled by other government agencies; an interagency taskforce on the property market provides a platform for regular data sharing and surveillance insights.
- Internationally, MAS has signed memoranda of understanding with foreign supervisory authorities for information sharing and has reciprocity arrangements to ensure effective implementation of macroprudential policies, especially for countercyclical capital buffer measures.

### Systemic risk monitoring
- MAS surveillance and systemic risk assessment rely on comprehensive quantitative information, dialogue with industry, property market models, and stress tests.
- Identification of systemic vulnerabilities uses a variety of indicators across sectors, industry discussions, and international dialogue.
- MAS performs stress tests integrating top-down and bottom-up approaches for micro- and macroprudential surveillance and top-down solvency stress tests for the household sector based on granular mortgage debt information.
- Data collection:
  - MAS has broad powers to collect data via supervisory returns, commercial sources, and regular/ad hoc surveys.
  - MAS is enhancing banking regulatory returns to improve data granularity and has made progress collecting more granular information on household balance sheets.
- Data gaps and recommended improvements:
  - Singapore does not have sectoral flow of funds accounts and is encouraged to develop such accounts in the medium term to improve systemic risk monitoring.
  - Collecting borrower-level information on stocks of property-related loans for households (mortgages in the medium term and other loan types in the longer term) and non-financial companies would improve systemic risk monitoring.

### Property-related macroprudential instruments and market developments
- Being a small attractive market, Singapore’s residential property market is exposed to global and regional demand pressures.
- Empirical findings:
  - Residential property prices are significantly impacted by speculative activity and by foreigners’ and corporate purchases.
  - Purchases by foreigners have a significant effect on prices, explaining historically more than one-fourth of the changes in the quarterly growth rate of residential prices.
- Authorities’ multipronged approach:
  - Demand-side tools: limits on LTV ratios and on Total Debt Servicing Ratio (TDSR) have helped contain debt developments and improve loan quality.
  - Fiscal-based tools: Seller’s Stamp Duty (SSD) and Additional Buyer’s Stamp Duty (ABSD) implementation have been followed by a significant reduction of demand from speculators and foreigners.
  - Supply-side tools: the construction program for public housing is reviewed and calibrated yearly; the Government Land Sales program for private residential units is reviewed every six months to ensure adequate medium-term housing supply.
- Dynamic effects of macroprudential measures on residential prices:
  - Measures start reducing property prices from the second quarter following implementation.
  - Peak effect of 5 percent for each measure is reached six quarters after implementation.
  - Effects become sizeable after one year following implementation.

### Key recommendations on macroprudential policy (Table 1)
- Systemic Risk Monitoring
  - Develop sectoral financial accounts (flow of funds).
    - Responsible Authority: MAS/DOS
    - Timeframe: MT
  - Collect detailed information on the stock of property-related loans to the non-financial private sector (mortgage loans for households and property-related loans for non-financial companies).
    - Responsible Authority: MAS
    - Timeframe: MT
- Note: “MT−medium-term” is three to five years.

*Source: EXECUTIVE SUMMARY, Technical Note prepared as part of the 2019 FSAP for Singapore*

### 11. An interagency taskforce on the property market serves as a platform for regular

### 11. An interagency taskforce on the property market serves as a platform for regular

### Interagency coordination and international cooperation
- An interagency taskforce on the property market comprises representatives from MAS, the Ministry of Finance, and the Ministry of National Development to promote information sharing and coordination across relevant agencies.
- Macroprudential policy relies on instruments held both by MAS and other government agencies; coordination is therefore required for effective policy.
- MAS has signed memoranda of understanding with foreign supervisory authorities for information sharing and mutual cooperation and holds regular bilateral meetings with regional central bank counterparts.
- MAS participates in international and regional fora focused on financial stability and maintains reciprocity arrangements (e.g., with Basel Committee on Banking Supervision members) to ensure effective implementation of measures such as the countercyclical capital buffer and to reduce regulatory arbitrage and spillovers.
- For sector-specific measures of local nature, spillover effects are more contained and require less international coordination.

### Current macroprudential framework and key calibrations (selected measures and dates)
- Countercyclical capital buffer (CCyB): Implemented since January 1, 2016; decisions pre-announced by up to 12 months and at least annually in MAS Financial Stability Review (FSR); currently set at zero percent (as communicated in November 2018 FSR). (January 2016)
- Capital conservation buffer (CCB): From January 1, 2019, Singapore-incorporated banks need to meet a CCB of 2.5 percent (increased from 1.875 percent) of CET1. (From January 1, 2019)
- Liquidity Coverage Ratio (LCR) / Minimum Liquid Asset (MLA) requirement: phased calibrations starting January 1, 2015; all-currency LCR for three local banking groups started at 60 percent on January 1, 2015 and increased 10 percent annually to reach 100 percent on January 1, 2019; SGD LCR requirement of 100 percent from January 1, 2015 for those banks. (January 2015)
- Net Stable Funding Ratio (NSFR): All D-SIBs required to meet NSFR on an all-currency level from January 1, 2018; all-currency NSFR requirement is 100 percent for the three local banking groups and 50 percent for other D-SIBs. (January 2018)
- Household sector measures:
  - Maximum LTV on loans granted by financial institutions (July 2018):
    - 1st Housing Loan: 75 percent; or 55 percent if the loan tenure is more than 30 years (25 years where the property purchased is an HDB flat) or extends past age 65.
    - 2nd Housing Loan: 45 percent; or 25 percent if the loan tenure is more than 30 years (25 years where the property purchased is an HDB flat) or extends past age 65.
    - From 3rd Housing Loan: 35 percent; or 15 percent if the loan tenure is more than 30 years (25 years where the property purchased is an HDB flat) or extends past age 65.
    - Non-individual borrowers: 15 percent.
  - Total Debt Servicing Ratio (TDSR): 60-percent maximum ratio applicable to all loans, except to mortgage equity withdrawal loans with LTV ratios of 50 percent and below. (March 2017)
  - Mortgage Servicing Ratio (MSR) for HDB flats and Executive Condominiums (ECs): MSR capped at 30 percent of a borrower’s gross monthly income. (December 2013)
  - Elimination of interest-only mortgages: disallowed. (September 2009)
  - Maximum tenure for private properties and ECs: Absolute limit of 35 years. (October 2012)
  - Maximum tenure for HDB properties: HDB loans maximum tenure 25 years; financial institutions’ loans for HDB purchases maximum tenure 30 years. (August 2013)
  - Minimum Cash Down Payment: 1st Housing Loan: 5 percent; or 10 percent if the loan tenure is more than 30 years or extends past age 65. From 2nd Housing Loan: 25 percent. (January 2013)
  - Seller’s Stamp Duty (SSD): SSD on holding periods of up to three years with rates ranging from 4 percent (for properties sold in the third year) to 12 percent (for those sold within the first year). (March 2017)
  - Additional Buyer’s Stamp Duty (ABSD): residency-based calibrations (July 2018):
    - 12 percent for Singapore Citizens (SCs) buying their 2nd residential property;
    - 15 percent for SCs buying their 3rd and subsequent residential property;
    - 5 percent for Singapore Permanent Residents (SPRs) buying their 1st residential property;
    - 15 percent for SPRs buying their 2nd and subsequent residential property;
    - 20 percent for foreigners;
    - 25 percent for entities;
    - 30 percent for housing developers (with 25 percent remittable, subject to conditions).
- Corporate-sector cap related to property: Total property-related exposure of a bank is capped at 35 percent of total eligible assets.

### Systemic risk monitoring: assessment and vulnerabilities
- Overall assessment: The Singaporean financial system is generally healthy but contains pockets of vulnerabilities requiring close monitoring.
- Identified pockets of vulnerability:
  - Banks:
    - Locally incorporated Domestic Systemically Important Banks (D-SIBs) maintain risk-based capital ratios above regulatory minima in adverse scenarios.
    - Exposures include property market risks, legacy loans to the transportation sector, and name concentration risk.
    - D-SIBs’ liquidity coverage ratios reveal shortfalls of liquid U.S. dollar assets of up to 20 percent of GDP, and many banks fail liquidity stress tests in U.S. dollars, implying reliance on a stable domestic currency value.
  - Insurers: Stress tests show vulnerability of solvency positions, but resulting capital shortfalls are very small and would not lead to systemic risk.
  - Interconnectedness: Domestic contagion through direct interlinkages between banks and non-bank financial institutions is limited; contagion could occur through cross-border interbank exposures and financial market volatility. Singapore banks have more outward than inward spillover effects for Asian neighbors.
  - Households: Under a severe stress test scenario, mortgage servicing burden for households purchasing private housing would generally remain below 60 percent; however, a relatively small segment of lower-income households (monthly income under S$7,500) and younger borrowers (under 30) would see mortgage service-to-income ratio increase above 60 percent and face repayment difficulties.
  - Corporate: Nonfinancial corporates have healthy debt servicing capacity and significant cash buffers; corporate debt-at-risk rises significantly under stress, but cash and foreign currency revenues provide a buffer.

### Surveillance tools, data improvements, and stress testing
- MAS integrates top-down and bottom-up stress tests for banks and other financial institutions for microprudential and macroprudential surveillance.
- For households, MAS uses top-down solvency stress tests based on granular mortgage debt information to assess debt servicing implications of shocks to interest rates and income.
- MAS relies on quantitative indicators across four sectors (banks, corporates and households, non-bank financial institutions, external sector) and network analysis of balance sheet variables to identify linkages.
- MAS regularly surfaces a surveillance chart pack of indicators to senior management, aggregated from sources such as BIS data, Bloomberg, and Haver, in line with FSB (2018) recommendations.
- Data collection:
  - MAS has broad powers to collect data via supervisory returns, commercial sources, and surveys.
  - MAS is enhancing banking regulatory returns (MAS Notice 610) with full implementation planned for October 2020 to improve granularity, including assets and liabilities by currency, country, and counterparty type.
  - MAS collects account-level information on borrowers and new housing loans via a monthly Housing Loan Profile Survey and is exploring broadening account-level collection for outstanding housing loans.
  - Progress has been made on more granular household balance sheet data and strengthened credit bureau practices.

### Recommendations for data and monitoring priorities
- Develop sectoral flow of funds accounts (MAS together with other relevant government agencies, including the Department of Statistics) to improve analysis of macrofinancial linkages and monitoring of systemic risk; current sources are quarterly household sector assets and liabilities from Department of Statistics and partial sectoral information from multiple sources.
- Collect information on the stock of bank loans at the account-level to the non-financial private sector to improve household sector stress testing and systemic risk monitoring:
  - Current MAS household stress-testing considers sensitivity of debt service burden of new loans only because account-level data is available only for new loans; stock information is only at aggregate level.
  - This approach may underestimate shocks by excluding older potentially riskier loans; collecting the stock of debt and repayments for each borrower over time would enable modelling probabilities of default and a more accurate vulnerability assessment.
  - Prioritization suggestion: medium-term focus on collecting stock of mortgage loans; longer-term collection of major components of other non-mortgage loans.
  - For private non-financial corporates, systematically collect stocks of loans by borrower—especially loans related to the property market (e.g., real estate developers)—to improve systemic risk monitoring.

### Property-related macroprudential policy approach
- Singapore’s macroprudential toolkit has largely focused on the property market, using both credit-based measures (TDSR, LTV ratios, loan tenure limits) and fiscal-based measures (ABSD, SSD).
- Since 2009, property measures have been actively used and refined to promote stable and sustainable property markets, encourage household financial prudence, and ensure sound lending standards.
- Singapore pursues a whole-of-government approach:
  - MAS administers credit-based macroprudential tools.
  - Ministry of Finance administers fiscal measures (ABSD, SSD).
  - Ministry of National Development / Urban Redevelopment Authority manage land supply and release through planning and Government Land Sales and public housing programs.
- The authorities have implemented a macroprudential measure capping property-sector exposure of banks at 35 percent of total eligible assets; caps on banks’ exposure to other sectors have not been considered to date despite potential systemic risks.

*Source: 1sgpea2019004*

### 24. Public housing represents the bulk of the residential property market in Singapore,

### 24. Public housing represents the bulk of the residential property market in Singapore,

### Structure of the housing market
- Two-tier housing market: public market regulated by the Housing and Development Board (HDB) and a private market.
- About 80 percent of Singapore residents live in public housing.
- Housing composition as of end-June 2017:
  - Housing and Development Board flats: 72.6 percent of residential dwelling units.
  - Private apartments and condominiums: 21.3 percent.
  - Landed homes: 5.2 percent.
  - Other housing units (including mixed residential/commercial units): less than 1 percent.
- Homeownership rate: over 90 percent.
- Eligibility and tenure features:
  - Only Singaporean households with monthly income of S$12,000 and below are eligible to purchase new HDB flats.
  - HDB flats: sold typically on a 99-year lease.
  - Private properties: can be freehold or on a 999-year leasehold.
  - Executive Condominium (EC) scheme: eligibility for direct purchase requires monthly income of S$14,000 and below; minimum occupation period of five years; foreigners can purchase an EC only after 10 years from development completion.

### Market interactions and transmission channels
- Private market is more reactive to fundamental and speculative factors and is not subject to ownership conditions that apply to public housing.
- Spillovers and transmission mechanisms between public and private markets:
  - "Upgrading" hypothesis: as public housing prices increase, HDB owners’ affordability to upgrade to private properties improves; upgraders estimated to constitute about 60 per cent of annual demand for private housing.
  - "Crowding-out" hypothesis: higher private market prices can crowd out some HDB residents from the private market, transmitting speculative, non-resident foreigner, and corporate demand into public housing prices.
  - Population growth is a common demand-side driver contributing to co-movements between the two markets.

### Mortgage exposures and financial system importance
- Contribution to total value of mortgages to households (2018Q2):
  - Public housing contributes about 52 percent of total mortgages to households.
  - HDB-originated mortgages: 16 percent of total mortgages.
  - Commercial banks’ extension of mortgages to public housing: about 35 percent of total mortgages.
  - Loans for purchase of private properties: 48 percent of total mortgages and are exclusively granted by commercial banks.
  - Private property loans represent almost 60 percent of banks’ mortgages to households.
- Mortgage product features and trends:
  - HDB mortgage rates pegged to the Central Provident Fund interest rate (unchanged for the past 20 years); more stable monthly mortgage payments.
  - Increasing share of commercial-bank borrowers opting for fixed-rate loan packages and loans linked to fixed-deposit rates: share of outstanding housing loans on these packages tripled since end-2015 to 54 percent as of 2018Q2.

### Price dynamics, speculative activity, and policy measures
- Price developments and volatility:
  - Private residential market prices increased by almost 16 percent between 2010 and 2013.
  - Private residential property prices recorded an increase of 9.1 percent, y-o-y in 2018Q2 (the highest since 2011).
  - Prices stabilized and by 2017Q3 were about 12 percent below the previous peak of 2013.
- Speculative indicators:
  - Short-term resales (resales within one year, including sub-sales) and foreigners’ purchases were elevated before 2013; foreigners’ purchases peaked at about 20 percent of all transactions in 2011.
  - Corporate purchases and en-bloc transactions rose during the 2017–2018 pickup in private prices while foreigners’ purchases remained low.
- Policy measures and chronology (selected):
  - Seller’s Stamp Duty on industrial property: first implemented in January 2013.
  - Additional Buyer’s Stamp Duty (ABSD) initially introduced end-2011 and raised in 2013 by 5 to 7 percentage points for all buyers except Singapore Citizens purchasing their first residential property.
  - Limits on Loan-to-Value (LTV) ratio tightened and Total Debt Servicing Ratio (TDSR) framework introduced in 2013.
  - July 2018 measures: ABSD rates raised for corporates, non-resident foreigners, and individual buyers (excluding Singapore citizens buying their first residential property); LTV ratio limits tightened for all loans granted by financial institutions.
- Effects of July 2018 measures:
  - Total transaction volumes dropped by more than 25 percent in 2018Q3 compared to the previous quarter.
  - Growth of private residential prices decreased following the measures.

### Empirical findings on drivers of house prices
- Cross-country synchronization:
  - High interconnectedness of cross-country house prices in the region before 2013; synchronization significantly dropped after 2013.
- Regression results:
  - A one-standard deviation increase in speculative transactions, foreigners’, or corporate purchases leads to an increase in the quarterly growth rate of property prices between 0.4 and 1.2 percentage points, with the largest effect coming from foreigners’ purchases.
- Role of fundamentals vs. policies:
  - The contribution of macroprudential measures to the cooling of the market remains uncertain; fundamental factors may have contributed substantially.
  - Population growth slowed: population growth during 2013-18 was half as much as over 2007-12.
  - Growth of the foreign workforce fell from 9.4 percent y-o-y in 2011 to 2.2 percent on average in 2013-15 and 0.6 percent in 2016-18.
  - Supply-side: potential supply under Government Land Sales gradually rose from 2010 until end-2013; supply in the pipeline of private residences kept increasing into the mid-2010s.

### Household indebtedness and loan quality
- Household debt trends:
  - Household debt increased by 3.0 percent y-o-y in 2018Q3, reflecting mainly growth of outstanding housing loans from financial institutions.
  - Household debt stabilization from end-2013 coincided with lower housing prices and macroprudential measures including TDSR.
- Asset quality and loan characteristics as of 2018Q4:
  - Share of loans more than 30 days in arrears: about 1 percent.
  - NPL ratio: less than 0.5 percent in 2018Q4 (unchanged from a year ago).
  - Share of new housing loans with LTV ratios under 70 percent rose from 37 to 45 percent from 2018Q2 to 2018Q4.
  - Distribution of outstanding housing loans by TDSR as of 2018Q4:
    - 53 percent had a TDSR under 40 percent.
    - 43 percent had a TDSR between 40 and 60 percent.
    - 5 percent had a TDSR larger than 60 percent.
- Overall: while LTV ratios increased, the quality of housing loans remained strong through 2018Q4.

*Source: 1sgpea2019004*

### 34. The objectives of macroprudential policy in Singapore are to safeguard financial

### 34. The objectives of macroprudential policy in Singapore are to safeguard financial

### Objectives and instruments
- Primary objectives: safeguard financial stability and encourage financial prudence among borrowers.
- Authorities monitor speculative activities, excessive investment demand, and risky borrowing “to promote a stable and sustainable property market.”
- Fiscal-based measures:
  - Seller’s Stamp Duty (to curb speculative investments).
  - Additional Buyer’s Stamp Duty (to limit excessive property investment demand).
- Credit-based measures:
  - LTV limits.
  - Minimum cash down payment.
  - Loan tenure limits.
  - Total Debt Servicing Ratio framework.
- Rationale cited: “unsustainably high and rising property prices can create financial stability risks” given households’ and banking system exposure; low global interest rates and elevated house prices can lead to household overextension (MAS 2017).

### Effects on transactions, prices, and lending (MAS model and aggregate estimates)
- MAS model links three variables over 2002Q3-2014Q2: property transactions, property prices, and mortgage loans, with drivers including mortgage loans, fiscal measures, credit measures, GDP per capita, equity prices, land supply, interest rate, and foreign property prices.
- Estimated counterfactual impacts over the sample period:
  - Property prices would have been 17 percent higher in the absence of macroprudential measures.
  - Property prices would have been 10 percent higher without fiscal-based measures.
  - Property prices would have been more than 6 percent higher without the supply measures.
  - Mortgage loans would have been almost 35 percent larger without macroprudential measures.
  - Mortgage loans would have been 27 percent higher without credit-based measures.
- Mechanisms:
  - Credit-based measures directly constrain mortgage lending and slightly affect transactions and prices via the credit channel.
  - Fiscal-based measures directly constrain property transactions, with attendant effects on prices and mortgage loans.
  - Land supply impacts property prices, with slight spillovers to transactions and mortgage loans.

### Borrower risk profile and loan characteristics
- Macroprudential credit-based measures improved borrower risk profile.
- LTV limits for borrowers with multiple housing loans tightened progressively:
  - LTV cap for a second housing loan reduced to 45 percent since July 2018 (compared to 80 percent before August 2010).
- Share of new loans to borrowers with multiple housing loans:
  - Fell from 30 percent in 2011 to 15 percent in 2018.
- LTV distribution for new mortgage loans:
  - Share with LTVs above 70 percent fell from a peak of 73 percent in 2010Q3 to around 60 percent from 2014Q3 onwards (around 55 percent in 2018Q4).
- Total Debt Servicing Ratio measure translated into less risky loans at origination amid rising average loan maturities and uneven bank practices.

### Micro- and region-level analysis approach
- Analysis adopts granular methods beyond MAS model:
  - Regression discontinuity (event-window around implementation dates) using REALIS micro-data.
  - Regional panel dataset and local projection method (Jordà 2005) to estimate dynamic price impacts across horizons.
- Notes on methodology:
  - Regression discontinuity is local (few weeks around event); macroprudential effects may materialize over several months, necessitating dynamic horizons.

### Evidence on stamp duties, speculative activity, and foreigners’ purchases
- Implementation of stamp duties was followed by:
  - Sharp reduction of speculative activity (proxied by short-term resale transactions, including sub-sales), especially after rate increases in January 2011.
  - Significant drop in the share of private residential purchases by foreigners from early 2012.
- Despite reductions in speculators’ and foreigners’ transactions, prices continued to increase (albeit slower), indicating that the drop may not have been sufficient alone to stabilize price levels.

### Regression-discontinuity and mixed short-term findings
- Regression discontinuity studies for measures between 2009 and 2017 produced mixed results:
  - Most measures had no significant impact on transaction prices or a counter-intuitive positive effect.
  - One set of cooling measures translated into a statistically significant drop in transaction prices (Denga, Gyourkob and Li 2019).
  - Examples:
    - Additional Buyer’s Stamp Duty announcements in December 2011 and January 2013 were followed by a statistically significant 4-percent discrete jump in prices.
    - Measures in early July 2018 (increase in ABSD rates and tightening of LTV limit) were followed by a statistically significant jump of transaction prices.

### Dynamic effects and timing
- Dynamic estimates (local projection method, three-dimensional panel) indicate:
  - Negative effects on residential prices start to materialize about three quarters after implementation.
  - Peak negative effect reached at six quarters (approximately 18 months).
  - On average, each measure is found to translate into a decrease in the level of prices of 5 percent at the peak when controlling for fundamental factors through rent indices.
- Robustness:
  - Effects remain significant when excluding the post-2013 period and when controlling for rents.
  - Alternative estimation over 2004Q1-2014Q2 controlling for rents yields a smaller effect: a 2.5-percent decrease for each measure after one year of implementation (closer to MAS estimate of a 10-percent decrease of housing prices for 5 tightening episodes of stamp duties).
- Caution: Magnitudes should be interpreted cautiously due to potential incomplete control for concurrent measures (LTV limits, Total Debt Servicing Ratio) despite fixed effects.

### Regional heterogeneity
- Stamp duties had larger and more persistent impacts in the Core Central Region (CCR):
  - CCR had the largest proportions of speculative activity (short-term resales) and of foreigners’ and corporate purchases prior to stamp duties.
  - Regression analysis indicates Seller’s Stamp Duty and Additional Buyer’s Stamp Duty had significantly larger and more persistent impacts on private residential prices in the Core Central Region compared to other regions.
- Note: This does not imply stamp duties should only apply to CCR; they also affect other regions significantly.

### Mechanisms, economic significance, and causality tests (Appendix I)
- Panel regression specification: quarterly growth rate of regional prices regressed on short-term resales, foreigners’ and corporate purchases, growth of rents, change in total transactions, with time and region fixed effects; robust standard errors clustered by region with Cameron Gelbach and Miller (2008) correction.
- Key regression and causal findings:
  - Short-term resales, foreigners’ purchases, and corporate purchases are positively and significantly associated with faster residential price growth.
  - Additional regressions suggest causality runs from transactions to prices, not vice versa: growth of residential prices does not explain short-term resales, foreigners’ purchases, or corporate purchases (including tests with lags).
- Economic magnitudes (from regression (4) of Appendix Table I.1):
  - One-standard deviation increases:
    - Short-term resales: +5.3 p.p. → quarterly growth rate of private residential prices increases by 0.4 percentage points.
    - Foreigners’ purchases: +5.9 p.p. → quarterly growth rate increases by 1.2 percentage points.
    - Corporate purchases: +8.5 p.p. → quarterly growth rate increases by 0.5 percentage points.
  - For context, the standard deviation of the quarterly growth rate of private residential prices is 4 percentage points over the sample period.

### Overall assessment and policy implications
- Property market-related measures increase resilience of households and financial institutions by moderating pro-cyclicality of credit and residential price developments.
- Stamp duties:
  - Help limit excessive property price increases by curbing speculators’ and foreigners’ demand.
  - Directly target sources of residential price pressures and are argued to be less distortive than broad tightening of credit-based measures.
- Credit-related measures (TDST, LTV limits):
  - Improve debt service capacity of borrowers by containing excessive household debt growth.
  - Reduce speculative housing demand and house price growth.
  - Lower probability of default and loss given default for lenders by reducing the size and likelihood of price corrections.

_Italic: International Monetary Fund (content unit: 1sgpea2019004)._

### Appendix II. The Dynamic Effects of Macroprudential Measures

### Appendix II. The Dynamic Effects of Macroprudential Measures

### Data and econometric approach
- Three-dimensional panel (property type p: Housing and Development Board flat, private residence; region r: Core Central Region (CCR), Rest of Central Region (RCR), Outside Central Region (OCR); quarter t).
- Price and rent indices:
  - Private non-landed residential market: available at regional level from 2004.
  - Median HDB prices and rents by township: available from 2007Q2.
- Empirical specification: local projection method (Jordà 2005). For j = 0, 1, ..., 9, estimate:
  - Ln(Residential Price Index)p,r,t+j − Ln(Residential Price Index)p,r,t−1 = αj × MacroPruMeasurep,r,t + Σl γl × Δyp,r,t−l (l = 1..m) + Σk δk × Controlsp,r,t+k (k = −8..j) + Ln(Rp,r,t+j) − Ln(Rp,r,t−1) + λp + λr + λt + λrt + λpr + εp,r,t.
- MacroPruMeasure variable: 1 for tightening, −1 for relaxation, 0 otherwise.
- Controls include past (up to 8 quarters before) and future policy measure events; fixed effects included: property-type, region, time, region-time, and property type–region.
- Rent indices used to control for fundamentals (e.g., demographics, supply in pipeline).

### Baseline dynamic effects (2004–2018)
- Timing and sign:
  - Initial association: measures are initially associated with an increase in residential prices (positive coefficients up to two quarters following introduction), but these early positive coefficients are not significant once controlling for rent growth.
  - From the third quarter following implementation, effects turn negative and gradually deepen, reaching a peak around six quarters after implementation.
- Magnitudes (Panel A estimates, 2004–2018; coefficients for Macroprudential measure in quarter t at horizons t, t+1, …, t+9):
  - t: 1.34
  - t+1: 0.90***
  - t+2: -0.74***
  - t+3: -2.07***
  - t+4: -4.40***
  - t+5: -6.29***
  - t+6: -6.75***
  - t+7: -1.94
  - t+8: -1.17
  - t+9: -1.69
  - Note: At the peak (t+6) macroprudential measures are associated on average with a decrease in prices of almost 7 percent.
- Model features: property-type, region, and time fixed effects; property type–region fixed effects; region-time fixed effects; controls for past and future reforms. Observations by horizon range from 285 down to 231.

### Robustness checks and accounting for fundamentals
- Excluding post-2013 (Panel B, 2004–2013):
  - Coefficients across horizons show a broadly similar pattern; at longer horizons the negative effect is present and sizable (examples: t+5: -5.50**, t+6: -6.15**, t+7: -5.21***, t+8: -5.21***, t+9: -5.26***).
  - Observations: 171 at each horizon for this sample.
- Controlling for rents (Panel C, 2004–2018):
  - Macroprudential measure coefficients (selected horizons):
    - t: 1.04
    - t+1: 0.18
    - t+2: -1.19**
    - t+3: -1.69***
    - t+4: -3.57***
    - t+5: -4.87***
    - t+6: -4.95***
    - t+7: -2.24*
    - t+8: -2.38**
    - t+9: -2.41**
  - Rent index (Ln(Rent Index)p,r,t+j − Ln(Rent Index)p,r,t−1) coefficients (j = t..t+9): -0.30***, 0.34***, 0.63**, 0.79**, 0.83**, 0.85***, 0.78***, 0.61***, 0.54***, 0.57***.
  - At the peak, each measure is found to translate into a decrease in the level of prices of almost 5 percent (lower-bound estimate).
- Interpretation notes:
  - Results are qualitatively similar when excluding the post-2013 period, suggesting that the estimated impacts are not driven solely by the price decline since end-2013.
  - Controlling for rent growth removes the short-term positive coefficients, reducing concerns about endogeneity of measure timing.
  - Cointegration between HDB and private residence prices (with about a one-year lag) may imply underestimation of the absolute impact of measures.

### Regional heterogeneity: Core Central Region (CCR) vs others
- Mechanism:
  - Seller’s Stamp Duty (SSD) targets short-term resales (flipping) and is expected to affect areas with higher speculative activity.
  - Additional Buyer’s Stamp Duty (ABSD) targets foreigners and corporates and is expected to affect areas with higher shares of such buyers.
- Empirical evidence (Panel D, 2004–2018, controlling for rents with interaction):
  - Macroprudential measure coefficients (selected horizons):
    - t: 1.11
    - t+1: 0.30
    - t+2: -0.85*
    - t+3: -1.06
    - t+4: -2.34**
    - t+5: -3.72**
    - t+6: -3.83***
  - Exposed region–property type interaction (1 for private property observations of CCR in quarters when ABSD and SSD measures were implemented; 0 otherwise) coefficients (selected horizons):
    - t: -0.45
    - t+1: -0.60
    - t+2: -1.78
    - t+3: -3.24***
    - t+4: -6.49***
    - t+5: -6.14***
    - t+6: -5.93
    - t+7: -7.37***
    - t+8: -8.55***
    - t+9: -7.95***
  - At the peak, the effect on residential prices is on average more than 6 percentage points larger in the Core Central Region than in the other regions; impacts in CCR are also more persistent (statistically significant beyond two years).

### Key takeaways and implications for policy evaluation
- Timing: Macroprudential tightening effects on residential prices materialize with lags, peaking around six quarters after implementation.
- Magnitude: Baseline peak impact ~ -6.75 percent (nearly -7 percent); controlling for rents yields peak effects of almost -5 percent (interpreted as a lower-bound).
- Heterogeneity: Measures that target speculators or foreigners/corporates (SSD, ABSD) have significantly larger and more persistent price effects in areas with higher speculative activity and higher shares of foreigners’ and corporate purchases (CCR).
- Robustness: Results hold when excluding post-2013 observations and when controlling for rent-based fundamentals, and short-term positive estimates are mitigated when controlling for rent growth.
- Empirical practice: Inclusion of past and future reform indicators and multiple layers of fixed effects (property-type, region, time, region-time, property type–region) is critical to address omitted variable bias and seasonal or region-specific confounders.

*Source: Appendix II. The Dynamic Effects of Macroprudential Measures (1sgpea2019004).*

### Appendix Table III.1. Singapore: Property Market-Related Macroprudential Measures (Cont.)

### Appendix Table III.1. Singapore: Property Market-Related Macroprudential Measures (Cont.)

### Major policy measures and timeline
- December 2011 — Imposed ABSD on selected groups of buyers
  - Imposition of ABSD on the following categories of residential property purchases:
    - i. 10 percent for foreigners and non-individuals (corporate entities) buying any residential property;
    - ii. 3 percent for SPRs owning one and buying a second and subsequent residential property; and
    - iii. 3 percent for Singapore citizens owning two and buying a third and subsequent residential property.

- January 2011 — Increased holding period for imposition of SSD; Increased SSD rate; Lowered LTV limit
  - Holding period for imposition of SSD was increased from three to four years.
  - SSD rates were raised to 16, 12, 8, and 4 percent for residential properties bought on or after January 14. 2011, and are sold in the 1st, 2nd, 3rd, and 4th year of purchase respectively.
  - For property buyers who are individuals with one or more outstanding housing loans: LTV limit for housing loans granted by financial institutions was lowered from 70 to 60 percent.
  - For property buyers who are not individuals: LTV limit was lowered from 70 to 50 percent for housing loans granted by financial institutions.

- August 2010 — Increased holding period for imposition of SSD; Lowered LTV limit and raised minimum cash down payment
  - For residential properties bought on or after August 30, 2010, the holding period for the imposition of SSD on residential properties sold was increased from one to three years.
  - SSD revision by holding period:
    - Sold within the first year of purchase (held for 1 year or less) – the full SSD rate (1 percent for the first S$180,000 of the consideration, 2 percent for the next S$180,000, and 3 percent for the balance) is imposed.
    - Sold within the second year of purchase (held for more than 1 year and up to 2 years) – 2/3 of the full SSD rate.
    - Sold within the third year of purchase (held for more than 2 years and up to 3 years) – 1/3 of the full SSD rate.
  - For property buyers with one or more outstanding housing loans, the LTV limit was lowered from 80 to 70 percent for housing loans granted by financial institutions and the minimum cash down payment for housing was raised from 5 to 10 percent.

- February 2010 — Introduced Seller’s Stamp Duty (SSD) on selected residential properties and residential lands; Lowered LTV limit
  - Introduction of SSD on all residential properties and residential lands that were bought on or after February 20, 2010 and sold within one year from the date of purchase.
  - The SSD would be levied at 1 percent for the first S$180,000 of the consideration, 2 percent for the next S$180,000, and 3 percent for the balance.
  - LTV limit for housing loans was lowered from 90 to 80 percent for housing loans granted by financial institutions.

- September 2009 — Disallowed interest-only housing loans and interest-absorbing loans
  - Interest-only housing loans (IOL) and Interest Absorption Scheme (IAS) loans in which the developer absorbed interest payments on behalf of the borrower for a period of time were disallowed.
  - MAS disallowed the IAS and IOL with immediate effect from September 14, 2009. Measure applied to all private residential projects, with an exception for uncompleted private residential projects where the units had already been offered for sale under the IAS before September 14, 2009.
  - Context: IAS and IOL allowed purchasers to avoid significant payments until project completion after upfront 10-20 percent down-payment.

- July 2005 — Increased LTV limit; Decreased minimum cash down payment
  - LTV limit applicable to loans granted by FIs was raised from 80 to 90 percent.
  - Minimum cash down payment was decreased from 10 to 5 percent.
  - Measures applied to loans for both private and public housing.

- October 2001 — Removed deemed income tax on gains from sale of property within 3 years of purchase; Allowed foreigners to take SGD housing loans; GLS review
  - Removal of deemed income tax on gains from the sale of property within 3 years on and after October 13, 2001.
  - Restrictions that foreigners who were not PRs and non-Singapore companies were not allowed to obtain housing loans in Singapore dollars were lifted.
  - Government withheld launch of last 4 sites in the Confirmed List of the 2001H2 Government Land Sales Program; sites transferred to reserve list. Government announced for 2002 it would suspend the sale of residential and commercial sites from the Confirmed List; sites would still be available on the reserve list.

- November 1997 — Suspended SSD
  - Government suspended SSD for the sale of properties within 3 years of purchase made on or after November 19, 1997 to improve liquidity of transactions. Rationale: SSD no longer necessary since speculative activity had been quenched.

- May 1996 — Introduced LTV cap of 80 percent; Disallowed foreigners from taking SGD housing loans; Introduced deemed income tax on gains from sale within 3 years; Introduced SSD on properties sold within 3 years; Brought forward stamp duty payment date
  - LTV cap: Housing loan quantum was to not exceed 80 percent of purchase price or valuation, whichever is lower.
  - Disallowed granting of Singapore dollar loans to non-permanent resident foreigners and non-Singapore companies for purchase of residential properties.
  - Deemed income tax on gains from the sale of property within 3 years of purchase was introduced on May 14, 1996.
  - SSD introduced on May 14, 1996 to discourage speculation; SSD rates by holding period:
    - Sold within the first year of purchase (held for 1 year or less) – full SSD rate (1 percent for the first S$180,000 of the consideration, 2 percent for the next S$180,000, and 3 percent for the balance).
    - Sold within the second year of purchase (held for more than 1 year and up to 2 years) – 2/3 of the full SSD rate.
    - Sold within the third year of purchase (held for more than 2 years and up to 3 years) – 1/3 of the full SSD rate.
  - Bring forward stamp duty payment date:
    - Stamp Duties Act amended to bring forward the stamp duty payment date to the time of agreement to purchase a property (previously payable at title transfer).

### Key measures (summary of policy instruments and rates)
- Additional Buyer's Stamp Duty (ABSD)
  - 10 percent for foreigners and non-individuals (corporate entities) buying any residential property (December 2011).
  - 3 percent for SPRs buying a second and subsequent residential property (December 2011).
  - 3 percent for Singapore citizens buying a third and subsequent residential property (December 2011).

- Seller’s Stamp Duty (SSD)
  - Introduced February 20, 2010 for properties sold within one year; rates: 1 percent for the first S$180,000, 2 percent for next S$180,000, 3 percent for the balance.
  - Holding period and rates phased: August 2010 extended to three years with pro rata SSD (full, 2/3, 1/3) by year held.
  - January 14, 2011 SSD rates raised to 16, 12, 8, and 4 percent for sales in the 1st, 2nd, 3rd, and 4th year respectively for properties bought on or after that date.
  - January 2011 holding period extended from three to four years.

- Loan-to-Value (LTV) and down-payment changes
  - LTV limits lowered or raised at different times:
    - Lowered from 90 to 80 percent (February 2010).
    - Lowered from 80 to 70 percent for buyers with outstanding housing loans; minimum cash down payment raised from 5 to 10 percent (August 2010).
    - Lowered from 70 to 60 percent for individuals with outstanding housing loans (January 2011).
    - Lowered from 70 to 50 percent for non-individual buyers (January 2011).
    - Raised from 80 to 90 percent and minimum cash down payment decreased from 10 to 5 percent (July 2005).
  - Down-payment specifics:
    - Upfront down-payment under IAS/IOL context: 10-20 percent (referenced September 2009 context).

- Interest-only and interest-absorbing schemes
  - IAS and IOL disallowed with immediate effect from September 14, 2009 for private residential projects (exception for units already offered under IAS before that date).

- Tax and stamp duty timing
  - Deemed income tax on gains from sale within 3 years introduced May 14, 1996; removed from October 13, 2001.
  - Stamp duty payment date brought forward to time of agreement to purchase (May 14, 1996 amendment).

### Data and variable definitions (Appendix IV excerpt)
- Private Residential Property Price Index
  - Computed using stratified hedonic regression method. Sum of values of transactions from 2014Q1 to 2015Q1 used as weights. Indexed at 100 in 2009Q1. Source: URA.

- Rental Index of Private Sector Residential Properties
  - Index based on ratio of current rental per square meter per month compared with that in 4th quarter of 1998. Source: URA.

- Supply of Private Residential Units in the Pipeline
  - Sum of “Supply of Private Residential Units in the Pipeline under Construction,” “Planned Private Residential Units with Pre-requisites for Sale,” “Planned Private Residential Units without Pre-requisites for Sale with Written Permission,” and “Planned Private Residential Units without Pre-requisites for Sale with Provisional Permission.” Source: URA.

- Property Price Index of Non-Landed Residential Properties by region
  - Price index of private residential properties in Core Central Region (CCR), Rest of Central Region (RCR), or Outside Central Region (OCR). Source: URA.

- HDB Resale Price Index and regional HDB indices
  - HDB Resale Price Index based on quarterly resale price by date of registration (HDB).
  - HDB price index by region built from median prices by township of 3-, 4-, and 5-room flats (HDB and IMF staff calculations).
  - HDB rent index by region built from median rents by township of 3-, 4-, and 5-room flats (HDB and IMF staff calculations).

- Transactions and population series
  - Transactions by Singaporeans, Permanents Residents, Foreigners, and Corporates: Quarterly volume of property purchases by group and by region (CCR, RCR, OCR). Source: MAS.
  - Population: Total and resident population. Source: Department of Statistics Singapore.
  - Transactions: Total non-landed transactions including new sales and excluding ECs. Source: REALIS and IMF staff calculations.
  - Resales: Total non-landed resale transactions (including sub-sales), excluding new sales and ECs. Source: REALIS and IMF staff calculations.
  - Short-term resales: Non-landed resales (including sub-sales) completed within the year following the purchase date, excluding ECs. Source: REALIS and IMF staff calculations.

*Appendix Table III.1. Singapore: Property Market-Related Macroprudential Measures (Cont.), and Appendix IV. Variable Description and Sources.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2019/1sgpea2019004.pdf_