Housing prices set to rise, but govt committed to affordable homes
By Joanne Chan, Channel NewsAsia 29 December 2009
SINGAPORE : It has been a roller coaster ride for the Singapore property market this year, dipping in the first quarter before registering a sharp rebound.
Market watchers have said housing prices will continue to rise next year, spurred by a recovering economy and the opening of the integrated resorts (IRs).
The robust turnaround in the property sector was something no one would have predicted.
Singapore entered the year in the midst of a recession, and the outlook was bleak.
But as the stock market rallied in March, sentiments improved.
Market watchers said pent-up demand over the last year and a "herd instinct" led to a buying frenzy.
Speaking to MediaCorp, National Development Minister Mah Bow Tan acknowledged it has been an exceptional period.
He said: "Nobody, no matter how prescient, no matter how clever, would have been able to predict that this is what is going to happen this year. All of us were caught off-guard... I did not expect the prices to go up. But the point is, are we able to respond to this change. And the answer is yes."
Fears of a property bubble forming saw the government introducing measures such as removing easy financing schemes to cool the private homes sector.
The measures included removing the interest absorption scheme and interest only loan to temper the exuberance of the market.
Public housing supply was also ramped up, to signal that there are enough flats and there is no need to panic.
Eugene Lim, associate director, ERA Asia Pacific, said: "The market will probably stabilise for now. But I would say that when the IR opens, and when more international investors do come into Singapore, we may expect another run. Especially now, in the recent one, two months, we have noticed a pick up in high-end properties priced above S$2,000 per square foot."
Although housing prices are set to rise next year, Mr Mah said the government is closely monitoring the situation and will take action, if necessary. For example, Mr Mah said more land will be released to developers if needed. He also promised first-time buyers that HDB will have more Build-To-Order exercises, if there is demand."
But Mr Mah said calls for the government to artificially dampen prices is not the solution to affordability.
He said: "The whole question is, do we peg HDB flats to the market, or whether we follow another system. And that other system is what some countries use.
"In other words, I sell you a flat at fixed price, when you sell the flat, you have to sell it back to me also at a fixed price. In other words, you are not allowed to profit from the flat. There you can keep flat prices fixed."
Mr Mah said a flat is not just a roof over one's head, but also an asset that will increase with time.
Martin Koh/ Sherry Tang