BT : Another dousing to cool property market

Business Times - 30 Aug 2010

Another dousing to cool property market

More flats to be built; govt looking at measures on resale deals and private housing

By CONRAD TAN

(SINGAPORE) The government will take further action to cool the property market and curb speculation in the resale market for HDB flats, including building 22,000 new public homes next year - up from 16,000 this year, Prime Minister Lee Hsien Loong said last night.

'We've twice acted to cool the market - once last year, and once in February this year - but the prices are still rising,' Mr Lee said in his National Day Rally speech. 'I think we need to do more.'

The National Development Ministry is expected to announce more details this morning, before the stock market opens.

'I don't want to go into the details tonight, otherwise you will remember nothing else about my speech,' Mr Lee said, drawing laughter from the audience at the University Cultural Centre at the National University of Singapore.

Private-home prices have risen 38 per cent in the year to the second quarter, according to an index compiled by the Urban Redevelopment Authority.

Prices rose 5.3 per cent in the second quarter, only slightly slower than the 5.6 per cent increase in the first quarter. The prices of HDB flats in the secondary, or resale, market have also risen sharply in recent months.

The government will tighten rules that allow private-property owners to buy an HDB flat in the resale market, and then sell it soon after. 'Quite a number' of private-property owners have bought HDB resale flats and then sold them after a year or two, Mr Lee said. 'I think we should tighten the rules further, so that it's quite clear that HDB flats are meant primarily for owner-occupation.'

The surge in property prices in Hong Kong and Singapore is in part 'a reflection that there's a lot of liquidity flowing to Asia', which has weathered the financial crisis better than the United States and Europe, said Selena Ling, an economist at OCBC Bank.

Ten days ago, the Hong Kong government announced more measures to curb speculation in its own red-hot property market, including raising the supply of land for sale and barring the resale of new condominiums before the properties are delivered.

The government will also allow Singaporean households who earn $8,000-$10,000 a month to buy HDB flats under its design, build and sell scheme (DBSS). Such households often can't afford private homes, but could previously buy only executive condominiums from HDB, since they earned more than $8,000. The government will release more land for executive condos and DBSS flats to ensure adequate supply, Mr Lee said.

Elsewhere in his wide-ranging speech, Mr Lee strove to reassure Singaporeans that the government would put their needs first, emphasising efforts to sharpen the distinctions between citizens, permanent residents and non-residents, as well as to protect Singaporeans' jobs.

He hinted that the foreign-worker levy that employers of foreign workers must pay could rise beyond the levels already announced in February, making it more attractive for firms to hire local workers where they can.

'The levies are going up, they're going to go up further - and I think they'll have to go up further beyond that in the longer term, or maybe the not so long term,' he said. 'Some employers may feel the pinch, but it is necessary because we need to manage the inflow and not have an indefinite number' of foreign workers, he said.

Mr Lee also announced a new award, totalling $9,000, to recognise the national-service contributions of Singaporean men.

The sum will be paid in tranches at 'major milestones' of an NSman's service into his Post-Secondary Education and Central Provident Fund accounts, Mr Lee said. The award is for citizens only; permanent residents who have done national service will receive the award when they take up citizenship. The Defence Ministry is expected to announce details this week.

The government also expects to pay out some $400 million to 400,000 Singaporeans who qualify for the Workfare Income Supplement scheme for low-wage workers aged 35 or older this year, Mr Lee said. That scheme, too, is for Singaporeans only, and puts them at an advantage over low-wage foreigners here, he noted.

'But the protection can only go so far,' he added. 'If you lack the skills or are not competitive, then it doesn't matter how high the foreign-worker levy is, or how generous the Workfare is, the jobs are still going to go elsewhere.'

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