Extract of Parliament report – 23^rd Nov, 2009

PRIVATE ESTATES

(Rates for collection of refuse)

MEASURES TO COOL THE PROPERTY MARKET

Mr Christopher de Souza (MP for Holland-Bukit Timah) asked the Minister for National Development if he will provide an update on the impact and effectiveness of the measures to cool the property market, in particular (i) the effect of the abolition of Interest-Only Loans (IOL) and Interest Absorption Scheme (IAS); and (ii) the re-introduction of the Confirmed List of land sales for the first half of 2010.

The Minister for National Development (Mr Mah Bow Tan):  Mr Speaker Sir, on 14th September 2009, I announced in this House a package of property market measures to temper the exuberance in the market and pre-empt a property bubble from forming.  One of the measures was the removal of the Interest Absorption Scheme (IAS) and the Interest-Only Loans (IOL), which was effective immediately.  Another was the resumption of land sales on the Confirmed List for the first half of 2010.

      URA recently released details of the first half 2010 GLS programme, there will be eight sites, which can yield about 2,900 private residential units for sale on the Confirmed List, another 18 sites on the Reserve List.  Overall, the sites in the Confirmed and Reserve Lists can generate about 10,600 units, which is the highest from any half-yearly GLS Programme since the Reserve List system started in 2001.

      All the sites in the first half 2010 GLS Programme are located in the Outside Central Region (OCR) or areas in the Rest of Central Region (RCR) where more affordable private housing can be built. These include five Executive Condominium (EC) sites.

     These measures appear to have had some effect in tempering the exuberance in the private housing market.  URA's monthly data shows that sales of private residential properties by developers fell month-on-month by 37% in September 2009, and by a further 29% in October 2009.

     The Government will continue to monitor the property market closely and assess the market's response to the measures introduced before deciding whether further measures are necessary to promote a stable and sustainable property market.

     Our key interest is to ensure that property prices and rentals remain competitive and move in line with economic fundamentals.  We want to curb erratic spikes in prices due to excessive speculation, inaccurate information or market manipulation. But we must let market forces determine prices, based on genuine demand from home-buyers and investors.

     The Government will continue to adopt a calibrated approach to promote a stable and sustainable property market, in the interest of all Singaporeans.

     Mr Christopher de Souza (Holland-Bukit Timah):   Thank you Minister for the confirmation that the measures have tempered exuberance.  Given that they have, is the abolition of the Interest-Only Loan and Interest Absorption Scheme, going to be a temporary measure and will there be a lifting of the abolition in future or do you see this as a more permanent feature?

     Mr Mah Bow Tan:   Sir, I think at this point in time, there are several uncertainties in the market.  First of all, of course the uncertainty in the economic recovery.  Secondly, there is also uncertainty about what is the longer term impact of the measures that we have introduced.  We have only removed these two schemes, the IAS and the Interest-Only Loans recently in September, so, it will take some time for us to really gauge the response and the impact of these schemes.  If I look back on a historical basis, we actually have had occasions where we have introduced measures to curb excessive speculation and then subsequently over time when the market has stabilised, or when the market was weakening, allowed some of these schemes to be restored.  So I would not say that we will never restore these schemes but I think it is a little bit too early to make a call on that.

     Mr Speaker:  Mdm Phua, last question.

      Mdm Cynthia Phua (MP for Aljunied GRC):   Thank you, Sir.  Can Minister let us know whether in the historical records, how many of these sales are sub-sales that means speculators buying them.  My reason is to re-emphasize that withdrawing these finance schemes really affect genuine buyers.

     Mr Mah Bow Tan:  Well, we do monitor the number of sub-sales.  If somebody buys a property and then sells it before the property is completed, say, within the first six months, we would loosely define them as sub-sales and generally speaking, regard them as speculative activity.  The records that we have so far indicate that the number of such sub-sales are not as high as they were in the hey-days, at the height of the property speculation when the market was getting out of control and a bubble was forming. Currently, there is no such evidence I mean. there are sub-sales but the number of sub-sales are not as high as they were before.  So I would say that the schemes that we have introduced have helped to dampen some speculative demand.  But I think the thrust of the Member's question is whether these schemes also affect genuine buyers. I think if you are a genuine buyer, if you are buying for owner occupation, my advice has always been, "buy within your means and if you do your calculations, do your sums, you will find that there are homes available, even in the private property market" that are within the range of these buyer.

But, ultimately, it comes back to the point that I have made to the Member, Paulin Straughan, just now. For first-time buyers in Singapore, we do have a very generous housing scheme, which is the HDB Public Housing Market. There, it is very clear that first-time buyers are well able to afford a very good home in Singapore. If they want to take part in the private property market, there are other schemes available, of course, not Government schemes but private schemes, which allow them to do so and the interest rates are currently low. There are also properties available in various parts of Singapore, not just in the central area. The latest number shows that there are about 60,000 units available, either already sold but not yet developed or built, or about to be sold. And about 35,000 of them are not yet sold.  The message must be that there is a lot of supply out there, at different prices and different locations.  I would urge Singaporeans to do their sums but also to look around and not to be rushed into buying something.