SINGAPORE (Reuters) - Singapore’s central bank has issued a warning to investors about the risks posed by buying property overseas, as high house prices at home prompt a growing number of its residents to invest in real estate abroad.
A strong Singapore dollar and curbs on mortgage lending at home have encouraged more Singaporeans to buy property in the likes of Britain and Australia, with the Monetary Authority of Singapore (MAS) reporting a 43 percent rise in the value of overseas property transactions handled by local real estate agencies in 2013 compared with 2012.
MAS said in a statement that it is monitoring developments closely to ensure financial stability and that investors do not over-extend themselves.
“Risks are more difficult to assess or manage when investors are unfamiliar with conditions in overseas markets, such as the prospects for oversupply of properties, or of a deterioration in economic conditions,” MAS said.
It also flagged the foreign exchange risk of borrowing in one currency but collecting rent in another.
MAS said the value of overseas properties dealt with by Singapore real estate agencies was S$2 billion ($1.6 billion) in 2013, up from S$1.4 billion in 2012.
A recent research report by estate agent Knight Frank found that buyers from Singapore accounted for 23 percent of all purchases of newly built central London property in 2013, second only to British buyers who accounted for 27 percent. ($1 = 1.2522 Singapore Dollars)
Reporting by Rachel Armstrong; Editing by Chris Gallagher