Chart of the Day: Here's solid proof that it's still too early to relax property cooling measures

Home prices need to drop further.

Property prices in Singapore have been declining for over two years, but analysts and policymakers argue that market cooling measures still cannot be lifted because housing costs remain too elevated.

This chart from Citi shows that in past cycles, cooling measures were only eased when prices have dropped by over 10% from their peak.

In the current cycle, overall home prices have only declined by around 6% compared to their February 2013 peak, making it unlikely that measures will be eased in the near future.

"With property prices less than 10% below the 2013 peak, the rate of decline easing in 4Q15 and mortgage rates still below the historical average of 3%, we think it is too early for a relaxation of property cooling measures," Citi said.

"Indeed, any adjustment in asset prices may be part of the necessary, if painful, adjustment needed to restore cost competitiveness in a cyclical downturn," the report added.