Redas chief had questioned need for govt intervention

MR SIMON Cheong, president of the Real Estate Developers’ Association of Singapore (Redas), raised government hackles this week when he questioned the need for government intervention to halt the rise of private home prices.

He had asked if the state should be so concerned with the prices of private home prices, when the segment serves only 16.5 per cent of the population.

The Government recently introduced cooling measures in the private and public property markets after observing signs of speculative activity.

Mr Cheong, who is also chairman and chief executive of developer SC Global, said the Government should shoulder some of the responsibility for short land supply and escalating property prices.

He cited two recent government land tenders to illustrate his point. A single bid for a Tampines site was rejected in June 2008 for being too low, but was awarded in March at a price that was about 3.6 times higher. A Ten Mile Junction mixed-use site also had a failed bid in April 2008, but went for 2.7 times higher last month.

‘Had the two sites been awarded back then at ‘market prices’, the current demand-supply mismatch scenario in the residential market may have been smoothed and price increases for such mass market projects more muted overall,’ he said.

The Ministry of National Development (MND) rebutted Mr Cheong’s claims the next day, pointing out the Government’s objective was to maintain a healthy property market. ‘A property market bubble, if allowed to form, may not only impact housing affordability, but also severely impact the economy when it bursts,’ it said.

MND said it was arguable if awarding the two sites at the low bid prices in 2008 would have moderated property prices, or simply allowed the bidders to achieve a fatter profit margin.

The sites could yield about 800 homes. Against a total supply pipeline of 60,476 uncompleted units of private housing at the end of last year, of which 34,234 units are still unsold, it was ‘questionable if the added supply from these sites in 2008 would have affected prices today in any way’, MND said.

Source: Straits Times, 27 Mar 2010