MEASURES TO ADJUST POLICIES ON PROPERTY MARKET (Implementation)

Mr Inderjit Singh asked the Minister for National Development whether his Ministry decided to implement the recently announced measures to adjust policies on the property market because of lobbying by the developer groups.

Mr Lim Hng Kiang: Sir, the policy adjustments on residential properties announced on 18th November are necessary to avoid aggravating the excess supply and further destabilising the property market. An unstable property market would have serious ramifications on the overall economy, especially when confidence has been affected by the prevailing regional financial difficulties.

These measures were not introduced due to lobbying by the developers. They were introduced for the overall good of the nation, and not to cater to the interest of any specific group.

Mr Chng Hee Kok: Sir, as a result of the currency turmoil and regional countries facing financial difficulties, it is very likely that the number of foreigners who will invest in properties in Singapore will be reduced. Was this foreseen when the last announcement was made?

Mr Lim Hng Kiang: Sir, as the Deputy Prime Minister explained just now in answer to an earlier question, we made the announcement in November considering the situation then - the slower demand, currency problems up to November, less demand from foreigners, excessive supply. Since then, of course, many things have happened. We are continuing to monitor and review the situation. But as of now, the present situation and the decision of November still stand.

Mr Inderjit Singh: Sir, the Minister mentioned that the decision made was independent of the lobbying by developer groups. The reason why I ask the question is that it seemed quite a coincidence that the action came quite soon after we heard the lobby from REDAS which was basically made to the Government.

The second point I have is: when did the Government realise that the property market was heading for trouble? Was it after the developer groups lobbied to the Government or was it through some other assessment?

Mr Lim Hng Kiang: The Ministry of National Development conducts regular dialogues with various groups - with REDAS, architects, engineers. We monitor the property situation closely. We were watching the reaction to the May 1996 measures and we were checking the developments in the property market. We knew that the supply that is forthcoming due to previous years' sales will result in between 10,000-12,000 units every year, and we were watching whether there will be demand to absorb this supply. In the good years, the demand easily ranged between 10,000-12,000. In 1996 and also in 1997, we expected the demand to range between 6,000-8,000 units. So curtailment of the supply for the last quarter of 1997 and a review of the 1998 supply are prudent things to do.

Mr Low Thia Khiang: Sir, will the Minister agree that the Government's response to the likely downturn of the property market seems to be a shift, compared to several years ago when Singaporeans complained that property prices were too high and there was a lot of speculation. It seems to me that the Government was dragging its feet in depressing property prices. Would the Minister care to explain?

Mr Lim Hng Kiang: That is not true. As property prices moved up since 1992, the Government increased land sales from 1,000 to 1,500 units, from 2,000 to 3,000, to 4,000 and then to 6,000 units. So the Government has responded each year with a larger land sales increase. Similarly, in this downturn, once we detect that there will be excess supply, it would seem rather irresponsible of the Government to continue to push out 5,000 or 7,000 units when the demand is not there. So we have moved the supply up when the demand is there and I think correspondingly, it is right for us to also cut back on the supply if the demand is soft.

Mr Jeyaretnam: Sir, may I ask the Minister, although the decision was not his, what was the reason for asking the Chairman of REDAS to give up his post after the lobbying was made and the announcement of the Government?

Mr Lim Hng Kiang: Sir, as I recollect, the Government did not ask the Chairman of REDAS to give up his post.