Thanks to higher real rates.
The accumulation of debt due to property purchases might have eased as Singapore's real rates rose, Morgan Stanley said.
The firm said Singapore's trends in debt-to-GDP have largely mirrored China’s, with negative real rates as the primary driver behind the sharp rise in leverage.
Morgan Stanley economist Chetan Ahya said, "Households, in particular, took the opportunity to engage in the property market, which resulted in a rapid accumulation of household debt post-credit crisis."
As real rates began to climb in late 2014, the pace of leverage build-up also eased.
For the household sector, the implementation of property purchase restrictions served as an additional constraint to further acceleration in debt growth.
The impact of these tightening measures on property prices and the pace of leverage increase has appeared to be evident in Hong Kong, but more so in Singapore.
Morgan Stanley expects the improvement in the property market will lend support to GDP growth as construction capital expenditure picks up.
"We expect growth momentum to sustain amid a more conducive external environment and a broader property market recovery. The export recovery could spill over to domestic demand but we expect the pickup there to be gradual," said Morgan Stanley economist Deyi Tan.
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