Private Property Purchases by Foreigners

Mr Christopher de Souza asked the Minister for National Development (a) if he would consider implementing measures to restrict the number of private property units a foreigner can purchase; (b) whether the amount of foreign ownership in private property is a cause of the high prices in the private property market; and (c) whether measures will be put in place to curb speculation by foreign buyers of private property, so as to make prices more affordable for genuine Singaporean home buyers.

Mr Khaw Boon Wan: Sir, in the first nine months of this year, developers sold about 12,000 units of private housing. This was about the same as the corresponding period last year. Demand for private housing has remained firm, despite growing uncertainties in the global economy.

In response to strong demand, we have ramped up the supply of land through the Government Land Sales programme. This year, we are releasing land for over 14,500 units to the market, compared to 10,000 units last year – so this is an almost 50% increase. We have also taken a series of measures to cool the property market and cut out speculative demand. The measures are having a clear impact, though the full effects will take some time to achieve.

While the private housing market is still rising, the rates of price increase have been trending down since the third quarter of 2009. So far this year, the price increase was 6%, compared to the 18% rise for the whole of last year.

Successful Singaporeans aspire to own private properties. We cannot promise that every Singaporean who wants a private property can get one, the way we can promise nearly every household an HDB flat. But we will ensure an adequate supply of land for private property to give Singaporeans more opportunities to own one.

Today, there are still 34,000 unsold private housing units, equivalent to more than two years of demand. We will keep up the Land Sales Programme until the market stabilises fully. The new supply will take time to come onstream, but over time it will help stabilise our private property market.

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However, Singaporeans are understandably anxious when they see property prices rising, especially those who are first time buyers of private property. The rising property prices cannot be attributed solely to foreign purchases.

As I have explained yesterday, there are many factors at play, such as low interest rates and our strong economic fundamentals. Locals account for more than four fifths of all private home purchases this year. Foreign demand has nevertheless been growing. Last year, foreigners accounted for 12% of private housing purchases. This has grown to 16% in the first half of this year.

We are monitoring market conditions closely and, if need be, we will take further measures. For landed property, we have longstanding rules restricting foreign purchases which we recently tightened. However, we have to be very careful not to precipitate a loss of confidence, especially with the international backdrop of continuing uncertainty in financial markets and weak growth in the US and Europe.

Mr Christopher de Souza: I thank the Minister for his comprehensive reply. My supplementary question has to do with the fact that, while we understand we must remain open as an economy to remain a global city, there is concern on the ground that 20% home ownership of private property belonging to foreigners may be a bit too high. And my concern reflecting the ground sentiment is that it makes it fairly volatile because foreign ownership is most likely to be given up in a downturn, and who is left? The 80% of Singaporeans – the majority of whom are genuine home stayers. So, would the Minister consider how the Australians do it – although land rich, they still require the foreigners to sell only to Australians and the foreigners buying property in Australia are limited only to new developments. Would that be something the MND would consider? Perhaps not now, but would it consider?

Mr Khaw Boon Wan: Sir, I am familiar with the Australian scheme. Countries have different approaches and schemes towards private property ownership and management because of their different circumstances and history. We have forged our way just as Australia has forged its own way, for years. Policies are never static. As I said, we keep a close watch over the situation and it is not just watching over the property market. As I have explained yesterday, while I need to make adjustments to housing policies, even more important is to make sure our adjustments do not unwittingly damage, do harm to our economy and our society because at the end of the day they are all interlinked. So, it is a gingerly act of balancing and making trade-offs. It does require some skill and hopefully some wisdom. I try to impart some into this whole transaction. So, the bottom line is: we are watching the situation closely. Remember the larger equation is beyond me – what is happening to Europe, what will happen next or this weekend when G20 leaders meet and what will they agree on, etc. Unfortunately, all these larger equations do impact us and we have to be watchful. But I assure the Member that the concern the Member has expressed, I am fully mindful of it because very often they appear on my Facebook wall.

Er Dr Lee Bee Wah (Nee Soon): Mr Speaker, Sir, I would like to ask the Minister this: just now the Minister mentioned that foreign buyers comprised 16% and the Minister is watching and if it need be, more measures will be coming. I would like to ask the Minister at what percentage of foreign ownership will he take further action.

Mr Khaw Boon Wan: Sir, it is very hard for wisdom to be translated into equations because if you can do so, then computers can take over and you do not need wise human intervention. But I think much more [ Interruption ] – sorry, Mr Low, what was that? "Meditate? Go Bhutan and meditate!", he said [ Laughter. ] Bhutan would be too cut off from the rest of the world! You may then not know what is happening elsewhere, and that would be highly dangerous.

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But I think more important is I hope Members are mindful that cooling measures – whether new measures, addition of measures or subtraction of existing measures – are market-sensitive information. That makes it difficult for me to be too expressive in my reply, and I think I should just stop here.