S’pore government promises affordable homes despite housing price increases

S’pore government promises affordable homes despite housing price increases
Dec 30, 2009 - PropertyGuru.com.sg

It has been a tough ride for the property market in Singapore this year, plummeting in the first quarter before accounting a good rebound.

Market experts said that the housing market will more likely continue to rise in 2010, spurred by economic recovery, as well as the opening of Singapore’s integrated resorts (IRs).

The sharp turnaround of the property sector was something that no one has predicted.

Singapore welcomes the year in the midst of economic recession, and the output was bleak. But as the stock market responded in March, the output has improved.

Several market watchers said that repressed demand over the last year and the "herd instinct" triggered the buying frenzy.

National Development Minister Mah Bow Tan noted that it was an exceptional period.

"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," the Minister said.

The fear of property bubbles drove the government to introduce several measures such as removing easy financing schemes to cool down the private homes sector, and taking out interest absorption scheme and interest only loan to temper the exuberance of the market.

Eugene Lim, associate director for 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 expected to rise in 2010, Minister Mah said the government is monitoring the situation and will take necessary action. For instance, the Minister said that more land will be released to property developers if needed. He also promised that HDB will have more Build-To-Order projects intended particularly for first-time homebuyers.

But he said that calls for the government to intervene in housing prices is not a good solution.

"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."