LATEST MEASURES TO COOL PROPERTY MARKET

LATEST MEASURES TO COOL PROPERTY MARKET: 2.

Er Lee Bee Wah asked the Minister for National Development (a) what is the compelling factor that prompted the Government to implement the latest property cooling measures; (b) whether the Government analysed buyer data to ascertain whether foreigners or Singaporeans were responsible for the speculative buying; and (c) why the release of state land for housing developments have not had the intended effect.

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, the property market was very buoyant last year. To meet the strong demand, the Government had increased the supply of land for private residential development. In 2010, the Government sold land that can potentially yield about 13,300 units. For the first half of 2011, the Government launched sites under the Government Land Sales programme that can yield another 14,300 units. As at the beginning of this year, there were about 33,000 unsold units, or roughly equivalent to three years’ take-up of private residential units, if we go by the average annual take-up rate over the past four years.

Despite the large supply in the pipeline, market sentiments had remained bullish, with signs of renewed exuberance in the market towards the end of last year. The majority of the buyers were Singaporeans. We were particularly concerned that low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could further drive up demand for private housing. This, in turn, could cause prices to overshoot economic fundamentals. The interest rates would also not continue to stay low. Purchasers who over-extended themselves financially could be caught

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when interest rates eventually rise, and they could be forced to sell their properties at an inopportune time.

Therefore, the Government introduced additional measures in January to pre-empt a property bubble from forming. These measures aimed to temper demand, encourage greater financial prudence among property purchasers and discourage short-term speculation.

We will continue to monitor the property market closely and take further steps, if necessary, to promote a stable and sustainable property market.

Er Lee Bee Wah (Ang Mo Kio): Mr Speaker, Sir, I would like to ask the Minister what is the intended end-result of the latest cooling measures. Would the Minister like to see property prices stabilise or go down?

Mr Mah Bow Tan: It is not the intention of the latest measures to crash the market, certainly, but rather to cool the market. Given the current situation of strong economic growth, low interest rates and a lot of liquidity in the market, it is not unnatural to expect that property prices would remain strong. But we do not wish to see prices shooting up so fast as to be unsupportable by the fundamentals in the market. At the same time, we also do not want to see a lot of short-term speculation in the market. Our measures in January were pre-emptive in nature because we wanted to act before a bubble forms. They were calibrated so as to cool the market and not to crash the market. They were very targeted at the short-term speculators and not at genuine home-buyers. If we meet these objectives, then I think the measures would have done the job. It is a little too early to say at this point in time what the outcome of these measures are, what the results are, because it has only been slightly over a month since we introduced the last set of measures. We will continue to monitor the

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market closely and as I have said, if necessary, we will take further measures.

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