Heng Swee Keat: Property market must be kept stable, should not 'run ahead of economic fundamentals'

The government 'must continue to enable young Singaporeans to own their homes and fulfil their aspirations,' DPM Heng said.

Nigel Chua | January 20, 2021, 04:39 PM

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Deputy Prime Minister (DPM) Heng Swee Keat outlined the government's current stance toward the property market, explaining that the government would be paying "close attention" to ensure stability.

This, Heng explained, was so that the government could "continue to enable young Singaporeans to own their homes", in a speech at the 61st Anniversary Celebration of the Real Estate Developers' Association of Singapore (REDAS) on Monday, Jan. 15.

Heng did not mention specific policy measures that would be put in place.

He did, however, promise to "remain vigilant" in light of the uncertainty in the current economic outlook, noting that in spite of Covid-19 pandemic, asset prices in the world have risen.

In that vein, Heng noted "renewed positive sentiments and some gathering of momentum in prices" in Singapore.

However, he also shed light on the concerns that the government had toward housing, saying that "we do not want to see the property market run ahead of the underlying economic fundamentals."

Property market has direct impact on Singaporeans

Separately, at another event, also on Jan. 18, 2021, Minister for National Development Desmond Lee also spoke about the property market, saying that it has "direct impact on Singaporeans".

"The Government is therefore committed to maintaining a stable and sustainable property market," Lee said, in line with Heng's remarks.

Lee said that the government has put in place "several measures" over the years, to ensure that prices are aligned with economic fundamentals.

He said that the government was "monitoring the developments in the property market very closely" and would adjust its policies "if necessary".

This, Lee explained, were to help the property market remain resilient to "economic downturns, property bubbles and external shocks like a pandemic," Lee said.

How has the government kept prices "in line with economic fundamentals"?

In 2018, the Ministry of National Development (MND) introduced new regulations to cool the market for residential properties.

The changes were done in order "to cool the property market and keep price increases in line with economic fundamentals," MND announced on Jul. 5, 2018.

The rate of Additional Buyer’s Stamp Duty (ABSD) was increased by an additional 5 per cent for Singaporeans and Permanent Residents buying their second and subsequent residential properties.

The increase was also applied for foreigners buying any residential property.

Loan-to-Value (LTV) limits were also lowered by 5 per cent for all housing loans granted by financial institutions, meaning that banks' loans to homebuyers could no longer be as generous.

The revised rates would take effect on Jul. 6, 2018, triggering a rush of buyers at show flats after they were announced.

New regulations expected for HDB flats in prime locations

Going forward, greater government regulation of the property market can be expected, with Minister for National Development Desmond Lee previously saying that the government will implement new regulations specific to Housing and Development Board (HDB) flats built in prime locations, in a Nov. 2020 interview.

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Top images via PMO website and Shermin Ng on unsplash