Govt’s ‘cool factor’ keeps private home prices sober

Published 4 March 2011
The Business Times
By Uma Shankari

Subsale activity also in check; govt is determined to ensure market stability, says Minister Mah

The four recent sets of measures to cool the property market – announced in September 2009, February and August 2010 and January 2011 – have prevented private home prices from spiralling out of control, said National Development Minister Mah Bow Tan yesterday.

Signs of slowdownIn addition, increased supply and demand-side measures have begun to show signs of stabilising the public housing market, he said.

The rate of price increase for private homes has slowed and continued to fall since the first set of measures was introduced in September 2009, data from the Ministry of National Development (MND) shows.

Subsale activity has also been kept in check. In Q4 2010, subsales accounted for 7 per cent of all private home transactions, compared to 13 per cent in Q2 2009 when the market first picked up strongly following the financial crisis.

The level of subsales, or secondary-market trading of properties under construction, is usually seen as an indicator of speculative activity.

Presenting the data in Parliament, Mr Mah added that how the market moves in the next few months will depend on many factors – state of the economy, interest rates, liquidity and external factors.

‘We will continue to keep a close eye on the market and act again if there is a need,’ he said. ‘Some people say that our measures have added uncertainty to the market. I beg to disagree. In fact, what is certain is that the government is determined to do whatever is necessary to maintain market stability.’

Mr Mah also said that his ministry’s move to boost the supply of new HDB flats and dampen non-urgent demand for resale flats has worked.

The month-on-month growth in HDB resale prices fell to 0.6 per cent in January 2011 and 0.7 per cent in February, he said. In Q4 2010, HDB resale prices rose 2.5 per cent quarter on quarter.

Likewise, the average monthly resale volume in January and February this year fell by another 16 per cent compared to resale volumes in Q4 2010, Mr Mah said.

Mr Mah was responding to questions from Members of Parliament about the effectiveness of MND’s cooling measures.

There were also concerns that with the run-up in HDB resale prices in 2010, public housing was becoming unaffordable for many.

Private home prices rose 17.6 per cent last year, according to official data. And earlier this week, a monthly index compiled by the National University of Singapore showed that prices of non-landed private homes rose 2.6 per cent in January – despite the government announcing more demand-side cooling measures in the middle of the month.

‘Despite the introduction of further property measures, the market remained firm, largely driven by high liquidity, phenomenally low interest rates and strong economic growth,’ Savills Singapore said in a fresh report yesterday.

But Mr Mah said that the government is trying its best to stabilise the market and moderate price increases amid extraordinary economic growth.

Other than demand-side measures, MND has ramped up the supply of private housing through the Government Land Sales programme.

It will also roll out more HDB flats in the first half of this year. HDB will offer about 14,000 flats under the build-to-order (BTO) system in the first six months of 2011, up from the 11,000 BTO flats planned previously.

For the full year, 22,000 flats are planned. This is unchanged from the previous estimated supply for 2011.

On top of this, the government has also said it will offer land sites for 4,000 flats under its design, build & sell scheme and 4,000 executive condominium units in 2011.

Besides stabilising the property market, MND will make structural improvements so that the market works better for developers and buyers, Mr Mah said.

The Urban Redevelopment Authority (URA) is considering new guidelines on showflats and sales material, he said.

For showflats, some of the guidelines would include having site plans drawn to scale, and not having showflats misrepresent the actual size of units.

The second key area of enhancement is to require developers to provide the prices of units on sale, as well as the transacted prices of units, in a more timely manner.

‘The proposed changes will allow buyers to have more comprehensive, accurate and timely information and make the market work better as a whole,’ Mr Mah said. URA will embark on a public consultation exercise this month before finalising the proposals.

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