Tuesday, March 9, 2010

Govt keeping tabs on home prices

THE Government will not introduce more measures relating to the property market for now, but will monitor the market closely, said National Development Minister Mah Bow Tan yesterday.

This follows a string of measures aimed at cooling both the private and HDB property markets unveiled by the Government in the past two months.

But Mr Mah said that to address land supply concerns – and to increase flexibility – the Government is tweaking one of the methods used to release new land sites, and will make more land available to developers.

He announced the move in Parliament during the Committee of Supply debate, as he fielded questions from several MPs on the health of the real estate sector.

Dr Amy Khor, MP for Hong Kah GRC, said complaints aired by buyers in recent months – on rising property prices and project sellouts – are ’symptomatic of short-term dislocations between the housing market and the overall economy’.

‘If overall economic growth and property prices continue to diverge for a prolonged period, we run the risk of blowing a real estate bubble,’ she said.

Mr Mah said the Government had acted quickly to pre-empt such a scenario by introducing measures to cool the market.

Last month it said a property buyer now has to pay extra stamp duty if he sells a property within a year. The proportion of the valuation price that buyers can borrow for home loans has also been cut.

Last September, the Government stopped allowing developers to absorb interest payments for homes under construction to deter speculative purchases.

When asked what other measures the Government would adopt to pre-empt runaway prices, Mr Mah said there would be no more measures for now. ‘If there are signs that the market will overheat again, we are ready to introduce additional measures to stabilise the market.’

His comments are likely to come as a relief to an industry absorbing a slew of recent market-cooling measures.

Mr Mah recently also introduced new rules for the Housing Board (HDB) resale market: Buyers of non-subsidised HDB resale flats must now occupy their flats for at least three years before they can sell – up from 2.5 years or one year previously, depending on the financing.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said Mr Mah’s assurance would give the market a breather to digest recent measures and see the impact.

Real Estate Developers’ Association of Singapore (Redas) chief executive Steven Choo noted, however, that the Government’s approach has not changed as it is still monitoring the market.

MP for Sembawang GRC Lim Wee Kiak asked what form future measures might take. Mr Mah replied: ‘If I tell you, then there’s no point having those other measures in place in our pockets.’

He also said the Government would ensure there was an adequate supply of land to support economic growth.

The Government is tweaking the Urban Redevelopment Authority’s reserve site system in which sites are put out to tender if sufficient interest is shown.

With immediate effect, the deposit to be lodged by developers who trigger tenders under the reserve list will be cut from 5 per cent to 3 per cent of the minimum price, capped at $5 million.

The reserve list system offers sites on top of those on the confirmed list, which are tendered according to a set schedule.

The reduced deposit will help lower upfront costs and the cashflow burdens of developers, URA said.

Mr Mah also said the Government would consider releasing a reserve list site for sale immediately if more than one bidder submitted a price close to the Government’s reserve price.

Previously, a site was released for sale only if a developer’s submitted bid matched or exceeded the reserve price.

The Government will also offer a larger supply and wider variety of sites in the reserve list in the second half of the year to give developers more choice.

Details will be announced by June.

Industry observers said the tweaks could further cool the booming property market.

Mr Colin Tan, director of property consultancy Chesterton International, suggested however that the Government consider selling two or three sites at the same time to temper developers’ bids – which have been aggressive in recent months as competition for land heats up as they seek to replenish their land banks.

Source: Straits Times, 9 Mar 2010

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