NATIONAL Development Minister Mah Bow Tan yesterday emphasised that the Government has a role to play in the property market, but any intervention is ‘done sparingly’.
‘We try not to intervene but when we do, we do it only because we want the market to work better,’ he told The Straits Times in an interview. The Government wants to see a stable, healthy market, where prices are generally moving in tandem with the fundamentals of the economy, he added.
He was responding to recent comments by the president of the Real Estate Developers’ Association of Singapore, Mr Simon Cheong, who questioned the need for government intervention to halt the rise of private home prices.
Mr Cheong also commented on Wednesday that the Government should shoulder some of the responsibility for short land supply and escalating property prices. (See: Redas chief had questioned need for govt intervention)
The Ministry of National Development issued a statement on Thursday to rebut his claims, noting that the Government’s role in ensuring a stable market ‘matters to the well-being of Singaporeans and the economy’.
Mr Mah said yesterday that Mr Cheong’s argument that the Government should not interfere in the market, or that it may be intervening too much, was ’strange’.
‘It’s not the intention for us to replace the market… it’s like the HDB (resale) market, we don’t set prices. We let the market set the prices, but we intervene to make sure the price is in line with fundamentals and there is no excessive demand from excessive speculation,’ he said.
The Government wants to ensure, for example, that demand is driven by people who want to live in the property, or invest for the long term, he added.
‘That’s the position we take. We don’t intervene unless we have to (and) only when we think the market is not working well.’
Mr Mah also said that a property bubble is not good for the market and the public should be sceptical of developers who say otherwise.
Mr Justin Chiu, executive director of Hong Kong’s Cheung Kong (Holdings), said this week that contrary to what some believe, bubbles can be good as they fuel sales volumes and price rises.
But Mr Mah said yesterday: ‘When developers start talking and say bubbles are good for the market, I just wonder, why are they saying that?
‘It may be good for developers, but it’s certainly not good for people who want to buy, because of affordability, nor for investors… because when the bubble bursts, everybody gets hurt.’
The irony, he added, was that ‘if developers talk up the market, and people believe them, and prices go up and spiral out of control, then the more we will be forced to act. So I hope people realise that’.
Reacting to Mr Cheong’s comment that the reserve price system is unable to respond quickly enough during periods of high volatility, Mr Mah said the system is not new and has worked well.
‘So many sites have been sold by that system, and we’ve sold sites where people have bid below the reserve price,’ he said.
But in the case of two tenders cited by Mr Cheong which were not awarded at the time, Mr Mah noted the bid prices ‘were so ridiculous’.
‘It was a few bidders who were trying their luck because no one else was interested,’ he said. Even if developers obtained land at a low price, he thought it unlikely that they would sell cheaper homes to buyers.
When the market is high, developers will not sell for less than the market price, he added.
‘So it’s a really strange argument. But we’ve made our reply, let’s leave it at that.’
Source: Straits Times, 27 Mar 2010