UNITED STATES SUB-PRIME CRISIS

UNITED STATES SUB-PRIME CRISIS:

(Impact on property market): 5.

Mdm Ho Geok Choo asked the Minister for National Development (a) what impact will the current crisis in the US sub-prime market have on the property market in Singapore; and (b) what steps will the Ministry take to mitigate any negative effects on the property market, especially on public housing.

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, the impact of the sub-prime crisis on the domestic property market remains to be seen, as new developments are still unfolding everyday.

According to MAS, banks in Singapore have limited or insignificant exposure to the sub-prime market crisis in the USA. Local banks have issued statements to affirm this. MAS has also clarified that banks in Singapore do not issue sub-prime loans to local home-buyers. Moreover,

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MAS has reminded local banks to conduct proper credit assessments when granting loans.

The property market is driven by economic fundamentals and confidence. So far, there is no sign of a negative impact from the US sub-prime crisis. Our economic growth is still healthy. The key downside risk would be from a slowdown in the US economy, should their consumer spending and business investment be affected by tighter financing conditions. At this stage, the impact on Singapore's economic activities does not appear to be widespread or large. MTI is of the view that Singapore's fundamentals remain robust and, as the Minister of State for Trade and Industry told the House earlier, the growth forecast of 7%-8% remains unchanged.

Unless economic growth is affected, the impact of the sub-prime crisis on HDB flats will be minimal. HDB housing loans are funded by the Government. The requirements of owner-occupation, credit assessment and restriction for each household to own only one HDB flat also help to provide stability in the public housing market.

The impact of the US financial market on the rest of the world remains to be seen. The Government will continue to keep a close watch on the US sub-prime market and global credit situation.