IT is in the interest of all stakeholders to have a stable and sustainable property market in Singapore, Minister for Finance Heng Swee Keat told industry players at the Real Estate Developers’ Association of Singapore (Redas) anniversary dinner at Marina Bay Sands on Thursday night.
“The industry, homeowners and the government have a shared interest in ensuring a stable and sustainable property market. Indeed, the US subprime debacle and the ensuing Global Financial Crisis in 2007-08 have reminded us starkly of the perils of credit and property bubbles, and the risks of asset markets becoming de-coupled from the economy’s underlying fundamentals,” Mr Heng reminded the audience.
“The consequences have been severe in the US, as a housing market collapse quickly cascaded to the financial system and led to a recession, not just in the US, but in the rest of the global economy.”
These remarks come even as property players continue to chafe at the impact of government cooling measures on recent years. They highlight a host of issues that face developers here – from an oversupply of residential units to a ballooning unsold inventory and rising costs of construction and operations.
Thus, prices “cannot drop too deeply without affecting the quality of our products and operational obligations”, Redas president Augustine Tan said at the event.
“Having made significant progress in the standard of our built environment, it is no longer possible to look back. We have to progress.”
Citing a recent Redas survey of its members covering 14 non-landed projects launched from 2013 to 2015, he highlighted that respondents reported price reductions of up to 11 per cent with some projects having had two price cuts since 2013.
The clock is now ticking for the 3,000 units in projects from the Government Land Sales Programme of 2012 that have remained unsold to-date.
“Developers will have to sell out 100 per cent of the units in these projects by 2017 in order to qualify for the remission of the Additional Buyer’s Stamp Duty (ABSD) on the land cost,” said Mr Tan, who is also executive director, property sales and corporate affairs, at Far East Organization.
Since late 2011, developers here have had to develop any residential site they buy, and sell all the units in the new project within five years, or pay the ABSD of 10 per cent. Sites bought from Jan 12, 2013 onwards will incur a higher 15 per cent rate.
The Ministry of Finance had last month said that it did not see the need to relax this condition as “the deadlines remain relevant and reasonable”.
The Finance Minister told the gathering that Singapore had experienced swings in the property market from time to time but these have not led to volatility in the broader economy because of its prudent approach.
“The government has always taken a medium-term approach towards managing land supply, based on fundamental demographic and economic factors, and has encouraged a competitive and transparent environment to ensure a well-functioning property market,” Mr Heng said.
“When necessary, we have judiciously used targeted prudential and fiscal measures to smooth out the cycles and promote market sustainability over the medium term.”
In response to concerns over a potential oversupply of completed residential units, the government had moderated the pace of land sales for residential development. But this led to land prices staying elevated as a result and did not make it less costly for developers to replenish their land bank.